You can make a pretty good living supplying more than two-thirds of the worldâs most-famous consumer gadget. Except when demand for that high-priced smartphone starts to wane and youâre left looking for the next big thing. With the boom gone, the worldâs largest consumer-electronics manufacturer has little choice but to make new bets.
Foxconn Technology Groupâs second-straight slide in sales lays bare itâs folly of relying on Apple for more than half its business just as the iPhone designer is experiencing its largest slowdown in 22 years. A 12% drop for the third quarter puts Hon Hai Precision Industry Company, Foxconnâs listed flagship, on track this year for its worst decline in history. On Tuesday, the company reiterated that each of its divisions would fall, or, at best, end 2023 flat.
Four years after taking over from founder Terry Gou, chairman and CEO Young Liu no longer has the luxury of hyped-up iPhones and runaway demand for Sony Group games consoles to juice sales. Instead, heâs had to branch out into sectors that, on the surface, look well outside Foxconnâs wheelhouse. That includes products previously limited to industrial companies such as cars and satellites.
Despite a major presence in electronics including computers, servers, games machines and handsets, the company dedicated much of its annual showcase last month to electric vehicles (EVs). It has developed at least five EVs of its own and is working with global carmakers including Stellantis to manufacture future models. A cameo from Nvidia founder Jensen Huangâto show off their joint development of AI serversâwas one of the few hints that Foxconn is actually focused on anything beyond challenging Tesla and Toyota in the global EV market.
Itâs no mistake that Huang and Liu kept using the somewhat confusing term âAI factory"âwhich simply means servers that collate and process data for use in artificial intelligence. They arenât trying to sell to the iPhone and PlayStation crowd. Their audience is executives at industrial enterprises with billion-dollar budgets who see AI as the future of business.
Among the payload of SpaceXâs Transporter 9 rocket were Pearl-1H and Pearl-1C, Foxconnâs first low-earth orbit satellites. Thereâs no money to be made from these two nano-satellitesâinstead the company is using them as a demonstration of its ability to build what amounts to computers that fly among the stars, devices that need to be robust, reliable and able to withstand the rigours of space travel.
It also points to another more subtle change thatâs underway at Foxconn. Many of the most popular consumer devices over the past 20 years were made at the companyâs factories in China, including Sonyâs PlayStation, Appleâs iPhone, laptops from Dell Technologies and HP, and smartphones from Xiaomi. In the future, more of Foxconnâs products will be bought by companies rather than consumers. Itâs already a major supplier of 4G and 5G communications systems sold by European clients.
Most people will not purchase a satellite, but factories, trucks, ships, aircraft and logistics providers will increasingly rely on them to keep information flowing. Those two Pearls, orbiting Earth at 520km off the surface, are designed to show off Hon Haiâs work in broadband communications and next-generation networks that go beyond 5G technology.
Global technology companies are trying to figure out whatâs to come after successive booms in desktop PCs, mobile phones, laptops and smartphones. Industrial enterprises arenât waiting.
Carmakers, satellite companies, factory operators and infrastructure providers are moving quickly to adapt. Whereas Tesla once had the EV market almost to itself for a decade [at least in the West], every major car company is now adamant that they too will be EV players. Foxconn sees that as an opportunity. The external manifestation of this new plan is a line-up of vehicles ranging from sedans and SUVs to tractors and buses. But the true money-maker is inside, with all the cables, components and microcomputers that a modern vehicle needs to function. For years, this parts market was left almost exclusively to carmakers and an industry of direct suppliers. Now, electronics companies want in.
Foxconnâs satellite launch is part of this trend. The Taiwanese electronics giant is hoping to remind clients and investors that it has more tricks up its sleeve than deploying a million workers to assemble consumer gadgets. It just needs to find a new set of customers who will trust it to build products for the next industrial boom. ©Bloomberg
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
more
Author: Maria Fleming
Last Updated: 1702640403
Views: 2328
Rating: 5 / 5 (75 voted)
Reviews: 98% of readers found this page helpful
Name: Maria Fleming
Birthday: 2012-11-08
Address: 03603 Howell Roads, West Shawn, IL 55947
Phone: +4023365395964851
Job: Landscape Architect
Hobby: Amateur Radio, Coffee Roasting, Badminton, Poker, Baking, Astronomy, Painting
Introduction: My name is Maria Fleming, I am a vivid, strong-willed, frank, unyielding, important, steadfast, multicolored person who loves writing and wants to share my knowledge and understanding with you.