Foxconn Tries to Move Past the iPhone

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Foxconn Tries to Move Past the iPhone

• Kun-Mao Chao (???)
• Department of Computer Science and Information
  Engineering
• National Taiwan University, Taiwan
• A note given in BCC class on May 8, 2013

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Starting to develop its own
A wall of flat-screen televisions at Foxconns
headquarters in Taipei.
Source The New York Times 5/6/2013
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Foxconn Apple

• Terry Gou did almost everything that Apple could
  ask for. He made all those iPhones and he made
  them cheap.
• When Apple was subsequently criticized for low
  wages and poor working conditions at his
  factories in China, it was Mr. Gous company, the
  Foxconn Technology Group, and not Apple, that
  caught the most heat.

Source The New York Times 5/6/2013
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Foxconn Apple

• Foxconn, which is based here but does most of its
  manufacturing in mainland China, wants to reduce
  its reliance on Apple.
• Its new strategy is a shift away from making
  products that other companies design, and toward
  developing products of its own, with an
  especially aggressive push into designing and
  manufacturing large, flat-screen televisions.

Source The New York Times 5/6/2013
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Foxconn Apple

• Foxconn senses that the Apple aura isnt as
  invincible as before, said Jamie Wang, an
  analyst at the research firm Gartner. So they
  are worried that they need something besides
  Apples business that will allow them to grow.
• Last month, Foxconn reported that first-quarter
  revenue was dragged down 19.2 percent compared
  with the same period last year because of
  declining iPhone and iPad orders from its main
  customer, Apple.

Source The New York Times 5/6/2013
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Contract Manufacture vs. Branded Production

• Foxconns predicament mirrors a common problem
  faced by Taiwanese contract manufacturers, whose
  fortunes depend heavily on those of their
  clients.
• A handful of manufacturers, like HTC and Asustek
  Computer, have managed to shed their contract
  manufacturing businesses altogether to develop
  branded products.
• But as they began competing with clients, those
  clients began deserting them.

Source The New York Times 5/6/2013
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Sakai LCD factory

• Since last year, Foxconns investment choices
  have reflected its new strategy. Mr. Gou
  personally spent about 840 million on a 37.6
  percent stake in Sharps LCD panel factory in
  Sakai, Japan.
• Sharp needed a quick cash infusion and Mr. Gous
  purchase gave his company a quick way to control
  a component that accounts for more than 50
  percent of the production cost of a TV set.

Source The New York Times 5/6/2013
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Sakai LCD factory

• Most analysts say they believe Foxconn needs a
  larger TV customer. Televisions represent less
  than 5 percent of Foxconns business, far less
  than its revenue from Apple.
• Analysts say Mr. Gous efforts to buy an LCD
  factory and vertically integrate his television
  manufacturing represent anticipation that orders
  for an Apple television product will come his
  way.

Source The New York Times 5/6/2013
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The Dow Jones Industrial Average
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The Dow Jones Industrial Average
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Foxconn
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Foxconn