Tim Culpan from Bloomberg in Taipei joined us to discuss the Foxconn Group and how the company rose from a plastic injection moulding company to the largest contract manufacturing company building Apple iPhones and SoftBank Pepper robots. In this conversation, Tim provided 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 discussed the scale in which a company such as Xiaomi can approach Foxconn for contract manufacturing and discussed whether Foxconn has the capability to deliver a car in the near future.
Here are the interesting show notes and links to the discussion (with timestamps included):
- Tim Culpan
- 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 which consists of the largest contract manufacturing company in the world founded by Terry Gou. Based on Foxconn Annual Report 2014, Foxconn Group is #32 in Fortune 500 with a market capitalisation US$42.8B. Apple, their largest client, constituted more than 50.3% of their revenues.
- What is the vision and strategy of the company? [4:20]
- A Brief History of Foxconn with major milestones: started off as an injection moulding company, then evolve to computer connectors businesses subsequently 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 their own intellectual property (or patents) other than just doing contract manufacturing? A peak into Foxconn’s business strategy and how they obtain Apple’s iPhone business by making losses first. [8:55]
- Terry Gou (Wikipedia, Forbes) is the founder, CEO and Chairman of Foxconn. Are there any senior executives which 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 electronic shopping mall next to the Guanghua market with the incubator and venture capital fund focusing on new innovation and technologies in Taiwan. [14:38]
- No international board of directors but mainly Taiwanese, contrasting to TSMC having 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]
- At what kind of scale where a company can seek to outsource their manufacturing to Foxconn? What kind of clients and size of the company to go to Foxconn for contract manufacturing? [20:39]
- Interesting anecdote: Xiaomi’s challenge to FIH Mobile to do contract manufacturing of their phones. But senior executives intervened and the rest is history. [21:28]
- Building up the hardware ecosystem by investing in Taiwan. [23:15]
- Which are the countries that Foxconn operate in (China, Brazil, Mexico)? What are the capability levels of these factories all over the world? [24:40]
- Do Foxconn invest in robotics and automation to improve their contract manufacturing process? [28:50]
- What is 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 an alliance with SoftBank and Alibaba with Pepper Robot? [38:45]
- With rumors of Apple making a car and Elon Musk has stated that you can’t build a car like 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]
- How active is Foxconn with Taiwanese hardware startups? Do they invest other than hardware?
The show is hosted by Bernard Leong (@bleongcw) and are sponsored by Ideal Workspace (Twitter, Facebook and LinkedIn) with their new Aspirus Desk (Twitter, Facebook, Medium) and Linkcious (and check out their other product, Chiibi). Also check out Ideal Workspace’s new standing desk, Aspirus and sign up for their mailing list.