FIH and BYD to see financial performance affected by Nokia pull-back from contract manufacturing, say sources

Foxconn International Holdings (FIH) and BYD Electronics are expected to see their financial performance for 2009 affected significantly by Nokia's decision to stop using outside contract manufacturers for the assembly of its handsets, according to sources from the Taiwan handset industry.

iSuppli recently downgraded its forecast for the global EMS/ODM market for 2009 and beyond following Nokia's announcement. iSuppli previously forecast the global EMS/ODM market to contract 9.9% in 2009 to US$270.8 billion.

Nokia actually began the pull-back process in the fourth quarter of last year, sharply affecting the financial performance of both FIH and BYD in 2008, indicated the market sources, noting that Nokia is the largest client for both companies.

In 2008, FIH saw its revenues drop 13% and net profits down 83%, whereas BYD saw its net profits slide 30% although revenues were up 48%, according to data from the companies.