Apple supplier Foxconn surprised investors on Tuesday by reporting an 11% increase in profit for the third quarter.
This rise was driven by strong demand for smartphones in Western markets ahead of the holiday shopping season. Net profit rose to T$43.1 billion ($1.3 billion), beating market expectations of an 11% decline.
However, the company expects revenues for the fourth quarter and the full year to experience slight declines, although the fourth quarter is anticipated to be slightly better than previously predicted.
Apple’s recent sales forecast for the holiday quarter also fell short of Wall Street expectations, primarily due to weak demand for iPads and wearables. Foxconn’s smart consumer electronics division, which includes smartphones, accounts for approximately half of its total revenue. The company’s earnings announcement coincided with reports of a tax probe in China, adding further investor concern.
This tax investigation is reportedly linked to Foxconn founder Terry Gou’s announcement in August that he will be running for president as an independent candidate.