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Declining orders from big smartphone clients like Nokia have handed Foxconn International it largest-ever first-half loss.

The Foxconn Technology subsidiary, which only gives earnings twice a year, reported a $226 million loss, a huge increase over the company’s $18 million loss at the same point last year.

The reason for the loss is fairly straightforward: Key Foxconn International clients like Nokia and HTC can’t sell enough phones, and as a result are making manufacturing orders that are too small for Foxconn International to justify fulfilling. This, in conjunction with the global economic downturn, is eating into Foxconn’s bottom line.

“Looking forward, challenging economic conditions around the world may continue to cast uncertainties in our business environment,” the company said in its earnings report. “The management team remains cautious over the future handset market conditions in 2012.”

That doesn’t bode well for Foxconn International’s smartphone clients, who are clearly scaling back their expectations for the upcoming holiday season.

Unlike parent company Foxconn Technology, Foxconn International doesn’t manufacture Apple products like the iPhone, a smartphone that’s clearly immune to the downturn hitting the clients of Foxconn International.

Foxconn International’s share prices have taken a hit on the earnings news, dropping roughly eight percent in trading today.

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