Apple has given Foxconn record revenues thanks to “unprecedented” orders for its iPhone 6 devices, but Foxconn is trying to spread its wings away from Cupertino.
According to a new report from Digitimes, citing upstream supply chain sources, Foxconn Electronics has been aggressively aiding China-based smartphone clients such as Xiaomi, Meitu, Oppo and Meizu with boosting their sales.
Its reason for doing this is reportedly to increase earnings from non-Apple companies, which would help Foxconn reduce its reliance on whatever orders Apple throws its way.
Currently Foxconn’s earnings are heavily tied in with Apple’s success. Despite its role as a lead manufacturer for the iPhone 6, back in July Foxconn announced its lowest monthly earnings since March 2013, as the result of reported problems assembling Apple’s increasingly-complex devices.
As future iPhones and other devices become increasingly challenging to build, as a result of Apple pushing the limits of what is technologically possible, low yield months could become more regular.
Foxconn is particularly keen to help domestic smartphone companies sell their products outside of China, since this could result in a massive revenue boost for manufacturers should companies like Xiaomi become internationally-recognized names.
It was recently reported that Foxconn is also pouring $811 million into building low cost electric cars.
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
5 responses to “iPhone maker Foxconn wants to reduce its reliance on Apple”
I can understand why Foxconn would want to diversify, but they also need to bear in mind that Apple is the only company placing orders on such a scale and if Foxconn don’t want the work themselves, Apple will help another manufacturer to do it instead.
I think it’s inevitable that Apple will become much more interested in robotic assembly. There would be fewer issues regarding needing large numbers of workers, while several factories could be located in different parts of the world so that in the event of natural disaster, political instability or war, manufacturing would be better able to continue.
I’m also sure that Foxconn are also aware of this and while they have a lot of experience of robotic assembly, they will also know that they are the ones most likely to lose contracts, so diversification is important for them.
But what will happen when Apple falls? I’m not saying Apple will go bankrupt, but things could change in the free market where they aren’t the same company we see today. Imagine if Foxconn relied heavily on Dell or RIM today?
Foxconn assembled both Dells and Blackberrys. They are fortunate that they were chosen to assemble iPhones too or else their business would be quite different to how it is now.
Diversification works both ways. Foxconn needs to attract other major manufacturers and Apple needs to ensure that Foxconn can never abuse it’s relationship with Apple in the way that Samsung did. Apple will certainly want to have a ‘plan B’ in the event of major issues with Foxconn.
Lots of leaks from manufacturers. Apple has lost the ability to surprise people with their products. Given that apple has the margins. I see all manufacturing moving closer to USA. I think robotic assembly will help play a big role in this. Again this is probably going to take years before Apple fully moves into this model
Screw China. Move all manufacturing stateside.