Foxconn profits hit by rising operating costs

The world's largest contract manufacturer, Foxconn, saw second quarter net profit come in well below expectations, due to a rise in component costs and unsold inventory.

Foxconn reported net profit of T$17.49billion (£444.4million), 20 percent short of analyst expectations and slightly below the year-earlier results.

According to analysts the weak results reflected concerns about a loss of momentum in global smartphone sales. Foxconn unit FIH Mobile saw a wider first-half loss - it reported last week - and said that it faced a high risk of saturation in the smartphone market.

Despite trying to diversify into other areas, such as displays and autonomous vehicle start-ups, most of the company's profits still come from manufacturing phones for the likes of Apple and other leading mobile phone companies.

Rising component costs and investment in plant saw operating costs jump by 18 percent.