Analyse Asia is a weekly podcast hosted by Bernard Leong and features guests from across Asia’s vibrant tech community. This is the first episode of a series e27 will republish covering a range of companies, topics and news analysis. To follow Bernard, and Analyse Asia, check him out on Twitter and Facebook.
On this week’s episode, Tim Culpan, Bloomberg tech journalist in Taipei, joins Bernard to discuss the Foxconn Group and how it rose from being a plastic injection moulding company to building Apple iPhones and SoftBank Pepper robots.
In this conversation, Tim provides an in-depth analysis of Foxconn — from its corporate structure to the business units and intellectual property in automation, robotics and display screens that grow the revenues and profits of the company.
We also discuss the scale at which a company like Xiaomi can approach Foxconn for contract manufacturing and discuss whether Foxconn can deliver a car in the near future.
Here are the interesting show notes and links to the discussion (with timestamps included):
- How he get started in technology reporting [1:12]
- What the areas of his news coverage from Taiwan to Greater China are [3:01]
The Foxconn Group (or Hon Hai Precision Technology) [3:46]
- FoxConn (Bloomberg, Google Finance, Wikipedia) – Hon Hai Precision Industry Co. Ltd (HQ: Taipei, Taiwan), a conglomerate that includes the largest contract manufacturing company in the world founded by Terry Gou. Based on Foxconn ‘s Annual Report for 2014, Foxconn Group is No. 32 on the Fortune 500, with a market capitalisation of US$42.8 billion. Apple, its largest client, constitutes more than 50.3 per cent of revenues.
- The vision and strategy of the company [4:20]
- A brief history of Foxconn with major milestones: Started as an injection moulding company, then evolved to computer connectors and then to contract manufacturing. How the name came about: Fox and Connecting cables = Foxconn [5:28]
- Foxconn and its introduction into the supply chain of Dell [7:50]
- From assembling cables and components to iPhones [8:40]
- Does Foxconn develop its own intellectual property (or patents) aside from just doing contract manufacturing? A peek into Foxconn’s business strategy and how it obtained Apple’s iPhone business by making losses first. [8:55]
Terry Gou (Forbes) is the founder, CEO and Chairman of Foxconn. Are there any senior executives whom we should watch in the executive leadership team? What is the composition of the board of directors?
- Lieutenants: Dai Zheng Wu [12:10], Lu Fang Ming [13:25]
- No succession plan but his son Jeffrey Gou is now leading SynTrend Creative. SynTrend Creative is an electronics shopping mall next to the Guanghua market, with the incubator and venture capital fund focussing on new innovation and technologies in Taiwan. [14:38]
- No international board of directors but mainly Taiwanese; in contrast, TSMC (Taiwan Semiconductor) has an international board [16:20]
What are the major business lines for Foxconn? How is Foxconn structured as a conglomerate with their subsidiaries and affiliate companies? [17:55]
- FIH Mobile – 70-80 per cent owned by Foxconn doing non-Apple mobile devices: Xiaomi and Huawei. [18:37]
- Innolux – driver of Foxconn’s LCD business [19:10]
- Cloud computing with Alibaba and software with Mozilla Corporation on Firefox OS [19:40]
- SynTrend Creative
At what kind of scale should a company be to seek to outsource their manufacturing to Foxconn? What kind of clients, and what size are the companies, go to Foxconn for contract manufacturing? [20:39]
- Interesting anecdote: Xiaomi’s challenge to FIH Mobile to do contract manufacturing of their phones. Senior executives intervened and the rest is history. [21:28]
- Building up the hardware ecosystem by investing in Taiwan. [23:15]
Which countries does Foxconn operate in? What are the capability levels of these factories around the world? [24:40]
Does Foxconn invest in robotics and automation to improve its contract manufacturing process? [28:50]
Foxconn’s thinking behind:
- Gaining control of Sharp’s LCD business [32:07]
- Joint investment with Alibaba on SoftBank’s Pepper Robot [35:58]
Will Asia win in the robotics space against the US market with Pepper robot? [38:45]
With rumours of Apple making a car, and with Elon Musk stating that you can’t build a car the way you make phones, does Foxconn have the capability to deliver a car instead of phones? [40:52]
Foxconn and the Taiwanese hardware startup ecosystem [43:35]