On December 21, 1988, Foxconn established its first factory on the mainland. By 1998, it had climbed to 25th place in the list of global business companies according to U.S. Businessweek. From 2002 to 2015, Foxconn consistently ranked among the top 200 export enterprises in mainland China. Foreign media once described its rise in the electronics industry as "shocking."
Foxconn has expanded far beyond just electronics manufacturing and assembly, becoming one of the world's largest companies. In 2017, *Fortune* magazine listed it as the 27th largest company globally. But where can it go from here?
Since the launch of the iPhone in 2007, Apple has relied heavily on Foxconn for assembling its products in factories across mainland China and Taiwan. As the world’s largest contract manufacturer, Foxconn was founded by Terry Gou in 1974 and remains under his control. It employs over 700,000 people (over a million during peak seasons) and assembles devices like the iPad, Kindle, PlayStation 4, Xbox One, Nintendo Switch, and televisions.
Through a network of subsidiaries and related companies, Foxconn has grown into a true empire, covering areas such as printed circuit board manufacturing, touch modules, battery modules, nanotechnology, and connectors. Its subsidiary FIHMobile focuses on OEM production of non-Apple mobile phones. Apple is still Foxconn’s most important client, with millions of devices—mostly iPhones—being manufactured and assembled every quarter.
The relationship between Apple and Foxconn dates back to 2000 when Foxconn received an order to produce Apple’s new-generation iMac. However, this partnership also brought negative attention, especially after several worker suicide incidents occurred in 2010. In response, Foxconn installed safety nets and hired consultants, while Apple faced criticism 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 with restaurants and cinemas. From the factory’s point of view, this is a very good factory.†He added that the suicide rate at Foxconn was lower than in the U.S., despite the troubling incidents.
Despite the controversies, Foxconn managed to maintain and grow its wealth while keeping its relationship with Apple intact. Recently, the company has drawn attention for its ambitions beyond just assembling iPhones. Terry Gou, the founder, has been actively pursuing new ventures, including a bid to acquire Toshiba’s memory chip business for up to $19.5 billion. This move reflects his desire to expand Foxconn’s influence beyond traditional manufacturing.
Terry Gou, now 67, continues to push Foxconn’s expansion. Although he has spoken about retirement, the company lacks a clear successor, and the search for one is expected to continue for at least a decade. Gou remains firmly in control, unlike many of his peers in the industry who are older. For example, Canon’s chairman is 82, and TSMC’s Morris Chang is 86.
Many Taiwanese companies face succession challenges, and Foxconn is no exception. High personnel turnover and difficulty in finding executives who match Gou’s expectations and leadership style have been ongoing issues. His strict control and demanding nature are well-known, with some former executives noting that the harder you work, the more difficult it is to please him.
Gou’s five children have shown little interest in taking over the business or are too young to assume responsibility. This lack of a clear succession plan raises questions about the future of the company.
Profitability has also become a challenge for Foxconn. While revenue remains strong, profit margins have tightened significantly. The company’s gross margin dropped to 5.83%, while major clients like Apple, Sony, and Nintendo enjoy around 40% margins. Apple alone accounted for 54% of Foxconn’s $142 billion in revenue in 2016.
Delays in iPhone X production due to component issues have affected both Apple and Foxconn’s reputations. Meanwhile, competition from companies like Huawei poses a growing threat. Investors are also skeptical about the iPhone X’s sales potential, which led to a sharp drop in Foxconn’s stock price following Apple’s announcement.
Although Foxconn is deeply tied to Apple, it is exploring other avenues for growth. Reports suggest the company may be considering developing its own brands, though analysts doubt this strategy will be effective given its history of avoiding direct competition with customers.
Foxconn has made significant investments in emerging technologies, including AI startups like Megvii and Bitcoin ventures like Abra. It has also partnered with Tencent and HarmonyNewEnergyAuto to form FutureMobility, a driverless car startup aiming to launch fully electric and autonomous vehicles by 2020.
In the U.S., Foxconn signed a major deal with Wisconsin to invest $10 billion in building factories, creating 13,000 jobs, with a focus on producing large LCD panels for TVs. However, experts warn that the project carries risks, particularly in a market already saturated with high-quality LCDs.
Looking ahead, Foxconn must navigate challenges in OLED technology, which Apple has embraced. Sharp, which Foxconn now controls, lacks the capacity to supply high-quality OLED screens. Building new OLED factories requires massive investment and time, posing significant technical and financial risks.
Despite these challenges, Foxconn continues to explore opportunities in areas like IoT, big data, cloud computing, smart life, Industry 4.0 automation, and electric cars. With its deep ties to Apple and its founder’s vision, Foxconn remains a key player in the global tech landscape, constantly seeking new ways to grow and innovate.
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