Foxconn Asks is There Life After Apple?

By News Release | May 13, 2013

Foxconn Asks is There Life After Apple?

Taiwanese electronics manufacturer Foxconn Technology is trying to figure out if there is life after Apple, an industry analyst said. The company that operates electronics production facilities in China has been the source of a series of negative reports in recent years from industrial accidents to worker suicides to public complaints about working conditions, The New York Times reported recently.

And yet, while it produces electronics for a variety of Western companies, it is known primarily as a producer of Apple’s iPhone and iPad. Apple provides Foxconn with about 40% of its revenue, the Times said. Even if Apple’s fortunes look solid for now, that means, if Apple does stumble, Foxconn is the one that gets bruised.

“Foxconn senses that the Apple aura isn’t as invincible as before, so they are worried that they need something besides Apple’s business that will allow them to grow,” said Jamie Wang, an industry analyst at Gartner, a research firm.

By extension, as Foxconn’s fate can turn on a whim at Apple, it is also dependent on its other manufacturing contracts. To provide an alternative, the company has taken the new step of creating its own line of products, starting with a focus on flat screen televisions.

“Taiwan companies have always relied on being contract manufacturers and outsourcing manufacturers. Now we need to start looking at original design manufacturing and directly matching the needs of consumers,” said Luo Huai-jia, vice president at the Taiwan Electrical and Electronic Manufacturers’ Association.

Foxconn, subsequently, purchased 37.6% of an LCD panel factory from Sharp in 2012 and has set up a distribution line through RadioShack in China and Vizio in the United States. In October 2012, Foxconn launched its first television, a 60-inch set, which it does not sell under its own brand name. Not surprisingly, it did not have to outsource much; 90% of the components in the television were made by Foxconn.

“The decline in the business of our partners, such as Apple and Nokia, does affect us. We don’t want to just wait for orders. We are actively talking with many clients and asking if they can fully utilize what we make,” said Foxconn spokesman Simon Hsing.

Copyright (C) 2013 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved.

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