Careers at Foxconn
Foxconn is mainly engaged in contract manufacturing and supply of components used in electronic products such as desktop computers and mobile phones.
When Terry Gou founded Hon Hai in 1974, the parent of Foxconn, one of his motivations was to lower the cost of electronic products so that they can be more affordable for everyone.
Foxconn was founded by Terry Gou in 1974 as Hon Hai Precision Industry Co. Ltd. Initially the company primarily dealt in supplying electrical components to manufacturers. The first Foxconn factory in mainland China opened in 1988 in the town of Longhua, which is located in Shenzhen.
Foxconn has grown by displacing rivals from long-tail foundry manufacturing contracts and holding on firmly to customers it has won through its high-quality but low-cost products. In 2001, Foxconn displaced Asus in a contract that involved producing motherboards for Intel.
Foxconn used to be Apple’s primary contract manufacturer until the iPhone maker recently widened its outsourcing to reduce overreliance on Foxconn.
Foxconn recently finalized the deal to acquire Japanese LCD manufacturer Sharp, a move that is likely to pave the way for the company to expand into consumer market. The acquisition of Sharp is part of Foxconn’s diversification efforts. In another diversification oriented investment, Foxconn acquired Asia Pacific Telecom in 2014.
Foxconn has plants in Asia, Europe and South America. However, China has the highest concentration of Foxconn factories: 12 in all as per the last count.
Foxconn has a plan to deploy about 1 million robots across its factories. Those reports will replace human workers in job areas such as welding, spraying and assembling. The company estimated that Foxbot would be able to assembly 30,000 devices within a timeframe that has not been disclosed.
Deploying robots in factories is part of Foxconn’s response to rising labor costs.
With growing competition in the traditional electronic device components industry and following the loss of some Apple businesses, Foxconn is looking to expand into medical devices space.
Medical device themed acquisitions
As part of the efforts to accelerate expansion into medical devices space, the company took a stake in Sotera, a San Diego-based firm that makes wireless medical devices worn on the body. Sotera devices can be used to monitor blood pressure and other viral health signs.
The deal with Sotera has made Foxconn the startup’s supplier of batteries and sensors. Foxconn has also become the exclusive sales agent of Sotera in China. The collaboration between Foxconn and Sotera could culminate in outright buyout of the latter.
In another medical themed deal, Foxconn invested $5.5 million in Soundhawk. The company makes hearing devices. Foxconn is also in talks become a partner of Varian Medical System, especially to become the distributor of the company’s radiation treatment devices in China.
The reason Foxconn is expanding into healthcare space is that it believes it is uniquely qualified to serve the sector given its expertise in electronics component innovation and manufacturing. The transformation in the healthcare space where medical devices are becoming mobile and wireless also means that Foxconn can easily ride the industry trend.
Foxconn is excited by the financial opportunities in healthcare contract manufacturing industry. It is estimate that foundry manufacturing of medical devices will be worth $35 billion in revenues this year, indicating a 52% increase over $23 billion in 2013. But contract manufacturing of consumer electronics is expected to grow only 17% from 2013 to 2016.
Moreover, there are significantly higher profit margins in contract production of medical devices compared to foundry manufacturing of consumer electronic products.
Business model of Foxconn
Foxconn serves original equipment manufacturers (OEMs) either as a foundry manufacturer or supplier of components.
Among others, the company has a subsidiary called FIH Mobile that is mainly engaged in providing product development and after-sales support. FIH Mobile, which has won a contract to produce Nokia-branded devices designed HMD, a company formed by former Nokia employees, has its corporate headquarters in Cayman Islands.
The company strives to bring solutions that result in convenience in the everyday lives of people. It achieves that through low-cost manufacturing model that enables brands to enjoy the lowest total costs possible.
Foxconn’s areas of business focus are computer, consumer electronics, communications, digital content and auto parts. The company operates on five key tenets namely: technology, speed, quality, flexibility and cost efficiency.
The company employs multiple strategies to grow its customer roll. These strategies include participation at trade shows and conference.
The company also uses traditional media and the Internet to advertising to its products and services with the main reaching new customers and expanding the business.
In addition to these efforts, Foxconn also has direct sales team on the ground to hunt for new business deals. The company also maintains key accounts team headed by Key Account Managers.
As a provider to the OEMs market, Foxconn doesn’t maintain traditional customer relationship. The company’s engineers are at the forefront of customer support because they are the ones who work closely with customers at various stages of product development and prototyping.
Contract manufacturing: Foundry manufacturing is one of Foxconn’s main business activities. The company produces and assembles a range of electronic products such as computers, tablets and smartphones on behalf of brand OEMs. Foxconn operates manufacturing factories in several locations around the world. The plants that Foxconn operates globally enable it to produce close to customer and they also provide a channel to appeal to new customers.
Parts supply: Foxconn is also engaged in the production and supply of mostly components for electronic devices.
Diversification: In the recent times Foxconn has stepped up efforts to diversify its business at a time when it is also facing growing pressure in foundry business. For instance, the company is no longer the exclusive contract manufacturers for Apple. As such, the company can be seen diversifying into areas such as medical devices, where profit margins are greater than typical consumer electronics and where more growth is expected in the future. Foxconn is also diversifying into robotics business, with the company itself planning to deploy robot workers at its factories.
With more than 1.3 million employees running its factories globally, Foxconn counts its workers as its greatest asset. Without them operations at Foxconn’s research centers and production plants around the world would literally grind to a screeching halt. These workers not only help with product innovation and manufacturing, but they also help to bring new customers on board to ensure that the business keeps growing.
The many manufacturing plants that Foxconn owns around the globe are also a major resource for the company. Because of them, Foxconn has the manufacturing capacity to meet the production demands of its customers. Additionally, the mega factories also enable Foxconn to enjoy greater economies of scale. That explains why Foxconn is a cost leader in contract manufacturing.
The other key resource that Foxconn can boast of is its portfolio of intellectual property. Foxconn had more than 55,000 worldwide patents by 2012. Proprietary technologies that Foxconn owns are a great source of competitive advantage.
Foxconn’s customers are also its major partners as it works with them in areas of product innovation, testing and production.
For instance, Apple has made a number of investments in Foxconn to go toward robotics, R&D and factory expansion among others.
One of Foxconn’s main objectives is to increase affordability of electronic products so that every human being can have access to them. As such, the company has modeled its business to ensure that customers enjoy the lowest total cost possible in their production of consumer goods.
Labor cost is one of Foxconn’s major expenses. But the rising labor cost has seen Foxconn contemplating deploying robots on its factory floors to help with works such as welding, spraying and assembling.
But using robots in production could result in massive job losses in places where Foxconn operates factories. The company’s factories in China employ close to 1 million people.
Foxconn has and continues to diversify its operations, which means it generates revenue from more than one stream. One source of Foxconn’s revenue is contract manufacturing. The company also generates revenue through the sale of branded components for computing systems and devices. The acquisition of Sharp is likely to accelerate Foxconn’s expansion into consumer market.
Foxconn generated consolidated revenue amounting to $135.6 billion in 2015, up from $133.04 billion in 2014 and $91.6 billion in 2011.
info: Terry trained at China Marine Technical College. He previously worked as the Taiwan Director of Taiwan Electrical Equipment Association. Gou also served as president of Mold Industry Association. He was first elected to his current position at Foxconn in 1974.
info: Tai has served in the position since 2001. Jeng-wu trained at Tatung Institute of Technology in Taiwan.
info: Jui-hsia obtained its Bachelor’s degree in Business from the National Taiwan University. He also holds a Master’s Degree in Accounting from Taiwan’s Soochow University.
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