In Brazil, more than 3,700 employees at the largest factory are on strike to fight for increased wages and improved working conditions. These workers have been on strike since September 11, which has directly affected the shipment of new iPhone 6 and iPhone 6 Plus machines. In addition, on September 14, the British "Daily Mail" reported that since 2010, at least 13 employees of Foxconn's Shenzhen factory in their 20s fell ill and were diagnosed with leukemia, and five of them have died.
Terry Gou is not unaware of the crisis. Initiatives such as robotics strategy, investment in electric vehicles, and acquisition of electronics companies undoubtedly show that it is planning for the future. However, Terry Gou has to take into account the interests of shareholders and stock market performance, and a series of actions will hardly allow Foxconn to get rid of its status as the king of foundries in the short term.
Today, Foxconn still accepts wave after wave of orders from various high-tech companies, from laptops to iPhones, from digital cameras to LED lighting. Therefore, with this metaphor, Foxconn is like a diligent chef, relying on low vegetable prices and delicious dishes to attract customers to order endlessly and keep cooking. Customers have good appetites, so they can eat as much as he frys. Now, Foxconn has to focus on serving Apple and return to the foundry track.
Foxconn chose to cooperate with Japan's Nichia to obtain LED lamp beads at a price lower than the market price. Subsequently, the parent company Hon Hai Group took over Advanced Optoelectronics and expanded 50 MOCVD equipment to fill the gap in the company's LED chip manufacturing. In the field of packaging, in 2009, Foxconn acquired Chimei and acquired independent production rights in packaging, liquid crystal displays, and semiconductor equipment. In the downstream field, Peixin Semiconductor, a subsidiary of the group, is responsible for the R&D, manufacturing and terminal sales of LED street light modules; while Hongzhun Precision, which is also part of Hon Hai Group, has also expanded its LED department and is responsible for LED street light heat sinks and LED street light assembly.
While laying out the LED industry chain, Foxconn has also made gains in the foundry business. In 2009, Foxconn began to provide OEM services to international lighting giants such as Philips and General Electric. According to insiders, the LED OEM sales of Philips and General Electric alone exceeded 200 million yuan that year.
However, can Foxconn, which has a lot of troubles, stay where it is in the LED industry or go further? It remains to be tested.
But everyone understands that this is a problem, and it is a crisis. As we have seen, more and more orders are flying to Southeast Asia. Even Apple's orders are diverted from Foxconn, from 100% production by Foxconn to 80% production by Foxconn. Apple's strategic adjustment of decentralized suppliers has undoubtedly confirmed Gou's concerns more clearly. In addition, as China's demographic dividend gradually disappears and many production costs increase, OEM is obviously not a long-term business.
That’s not all Guo Taiming’s troubles. Foxconn's succession problem is not an easy problem to solve today. After the successor Guo Taiming carefully cultivated, his brother Guo Taicheng, passed away, Guo Taiming also said that he would not let his son, nephews, and nieces take over. So he is also trying to hire external executives, train internally, and implement the method of decentralizing power and interests, so that many young people can take over. As he said, "When the group reaches a certain level, it will move towards a federal or confederal system."
However, this arrangement does not seem to completely dispel the worries of the successor, because problems such as weak business growth and internal management changes seem to only become more and more prominent.
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