On December 21, 1988, Foxconn took its first major step by establishing a factory on the mainland. By 1998, it had already climbed to the 25th position in the list of top global business companies according to *Businessweek*. From 2002 to 2015, Foxconn consistently ranked among the top 200 export enterprises in the Chinese mainland. As foreign media put it, "The rise of Foxconn in the electronics industry is nothing short of astonishing."
The company has grown into a massive global entity, expanding far beyond simple manufacturing and assembly. In 2017, *Fortune* magazine ranked Foxconn as the 27th largest company in the world. But where can it go from here? The question lingers as the company continues to evolve.
Foxconn's rise is closely tied to Apple. Since the launch of the iPhone in 2007, Apple has relied heavily on Foxconn for device assembly in factories across mainland China and Taiwan. As the world’s largest contract manufacturer, Foxconn was founded in 1974 by Terry Gou, who still holds a tight grip on the company. With over 700,000 employees (and more than a million during peak seasons), Foxconn assembles devices like the iPad, Kindle, PlayStation 4, Xbox One, Nintendo Switch, and televisions.
Over the years, Foxconn has built an empire with at least nine major business units, covering areas such as printed circuit board manufacturing, touch modules, batteries, nanotechnology, and connectors. Subsidiary FIHMobile focuses on OEM production of non-Apple mobile phones. However, Apple remains its most important client, producing millions of devices—mostly iPhones—every quarter.
The relationship between Apple and Foxconn dates back to 2000 when Foxconn received its first order to produce Apple’s new-generation iMac. This partnership, however, has not been without controversy. In 2010, several worker suicide incidents at Foxconn factories sparked widespread criticism. In response, the company installed safety nets and hired consultants, while Apple faced backlash for outsourcing to a company that allegedly mistreated its workers.
In a 2010 interview, Steve Jobs defended Foxconn, stating, “Foxconn is not a sweatshop but an ordinary factory, where there are restaurants and cinemas. From the factory’s point of view, this is a very good factory.†He also noted that the suicide rate at Foxconn was much lower than in the U.S., despite the 13 reported cases that year.
Despite the controversies, Foxconn managed to maintain its relationship with Apple and continue growing. Recently, the company made headlines with its attempt to acquire Toshiba’s memory chip business for up to $19.5 billion—a move that signals its ambition to expand beyond just manufacturing.
Terry Gou, now 67, still leads the company with a strong hand. He recently acquired Sharp, marking the first time a foreign company has taken control of a Japanese electronics giant. Sharp was once Japan’s largest LCD maker and a key supplier for Apple’s iPhone X screens.
Gou’s journey began in 1974 with a modest loan of $7,500 from his mother. His relentless drive and ability to convince others to work with him have been well-documented. He once convinced Compaq representatives to order Foxconn’s computer cases, even though the company initially only produced connectors.
Despite his age, Gou shows no signs of slowing down. Although he has mentioned retirement plans, the company lacks a clear successor, and the search for one will likely continue for at least a decade. Unlike some of his contemporaries, such as Canon’s 82-year-old chairman or TSMC’s 86-year-old CEO, Gou remains active and influential.
However, the challenge of succession looms large. Many of Gou’s five children show little interest in the company, or are too young to take on leadership roles. Additionally, the high turnover rate and difficulty in finding executives who match Gou’s expectations and leadership style pose ongoing challenges.
Profitability remains a concern. While Foxconn’s revenue is strong, its gross margin has dropped to 5.83%, compared to around 40% for major clients like Apple, Sony, and Nintendo. In 2016, Apple alone accounted for 54% of Foxconn’s $142 billion in revenue. Recent earnings reports showed a decline in sales, attributed in part to issues with the iPhone X vendor.
India presents a new market, but low-end devices offer limited profit potential. Meanwhile, the rise of Huawei, the world’s third-largest smartphone manufacturer, poses a competitive threat. Analysts believe that Foxconn’s reliance on Apple is both a strength and a vulnerability.
As Foxconn looks to the future, it is investing in new ventures, including partnerships with SoftBank’s Vision Fund, acquisitions of tech startups, and expansion into electric vehicles and smart home technologies. It has also signed a major deal with Wisconsin to build a $10 billion factory focused on LCD panel production.
Yet, challenges remain. The company faces risks in transitioning to OLED technology, which Apple has adopted for the iPhone X. Sharp, which Foxconn now controls, lacks the capacity to supply high-quality OLED panels, and building new factories comes with significant financial and technical risks.
Despite these hurdles, Foxconn continues to push forward, aiming to diversify its operations and secure its place in the next wave of technological innovation. As long as Terry Gou and Apple remain central to its success, Foxconn’s future will be shaped by their evolving relationship.
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