Executives at Foxconn International Holdings, the contract handset manufacturer, like to talk about keeping pace with “industry game-changing movements”. That is to be expected: customers from Espoo to Cupertino are in a state of flux. But the reality is that the more significant developments are unfolding right on the doorstep of the Hong Kong-listed company, headquartered in Shenzhen. Six-month figures published late on Monday showed costs per employee up by exactly one-third, year-on-year, to just under US$2,900. The total staff bill was $272m: almost double gross profit.

For Foxconn’s 71 per cent owner, Hon Hai Precision Industry of Taipei, this is nothing particularly new: rising wages on the mainland helped to drive the consolidated operating margin of the world’s largest contract manufacturer of electronic devices, spanning FIH and 22 other subsidiaries, from 4-5 per cent 10 years ago to a 1-2 per cent range now. Until the 2008-2009 crisis, though, rising sales more than offset that decline, keeping earnings-per-share ticking up by about a quarter each year. Not any more. Hon Hai missed profit estimates for the third quarter in a row this week. Full-year EPS is currently expected at about nine-tenths of its 2007 peak.

Even if chairman Terry Gou succeeds in protecting Hon Hai’s top line, investments in new areas such as solar energy and cloud computing may keep net margins low. And the more the group scrambles to adjust to structural pressures, the less sure-footed it looks: witness the deadly explosion in May at a polishing facility for iPad 2 casings in Chengdu; production had been relocated there only months earlier from more expensive Shenzhen. Little wonder the stock’s valuation premium has all but evaporated. Hon Hai and its offshoots are looking like relics from another era.