Hon Hai – a Taiwanese firm also known as Foxconn, said that its fourth quarter profits rose to $1.8 billion on the back of the success of Apple’s iPhone.
Hon Hai makes most of Apple’s iPhones and has been criticised in the past for harsh employment practices.
But Bloomberg estimates, based on yearly results filed on Taiex – the Taiwanese bourse today – is far higher than financial analysts originally estimated.
Bloomberg claims the profits have been generated by iPhone 6 phones, which saw a surge in sales since their launch in Autumn last year. It believes half of Foxconn’s revenues are generated by Apple business, although there’s no hard and fast evidence for that.
But while Hon Hai may have turned in a rather healthy profit, its operating margin was only about 4.2 percent. Generally speaking, Taiwanese manufacturers of electronic devices have very slim margins indeed – not anything like the kind of margins Apple itself generates.
Although Foxconn’s Terry Gou had forecast growth of 10 percent in its full financial year, the actual growth was only 6.6 percent, Bloomberg reports.
It appears that Apple is set to release three more iPhones in the second half of this year.
Informed sources have leaked details of the models to Taiwanese wire Digitimes.
It reports that the phones will be the iPhone 6S, the iPhone 6S Plus and a four inch device currently codenamed the iPhone 6C.
Each of the phones will use Corning Gorilla Glass come with LTPS panels and while the 6S series will use Apple’s A9 chips, the 6C will use A8 microprocessors. They’ll all be kitted out with NFC as well as fingerprint scanners.
Digitimes also reports that Taiwanese firms Wistron, Foxconn and Pegatron will manufacture the handsets.
Meanwhile the same wire reports that chip foundry TSMC will fabricate the chips for the 6S and 6C.
Foxconn has confirmed that it is pressing ahead with its plan to replace its increasingly tricky staff with robots.
After all, robots will always work, and will not get depressed, kill themselves, or moan to western news media that they are being exploited.
CEO Terry Gou who once famously described his staff as animals, and he was the zoo keeper said that in three years, Foxconn will probably use robots and automation to complete 70 percent of its assembly line work.
Previously Gou said he hoped to one day deploy a ”robot army” at the company’s factories, as a way to offset labor costs and improve manufacturing.
This will be great news for Apple, which is Foxconn’s biggest customer, and found that its image was a little tarnished by the fact that its main supplier was installing nets to catch people who threw themselves off buildings.
Labour watchdog groups have complained that Foxconn workers have in the past faced long hours and harsh treatment from management.
Last year, Gou said that the company already had a fully automated factory in the Chinese city of Chengdu that can run 24 hours a day with the lights off.
Gou declined to say more about the factory, or what it produced, but Foxconn has been adding 30,000 industrial robots to its facilities each year, he said in June.
Gou said his company needed to adopt more automation, due to the potential for labor shortages. Young people won’t do this kind of work, and won’t enter the factories, he moaned.
Foxconn will slash jobs because of falling demand for Apple gear.
That’s according to Reuters, which has spoken to a company representative who confirmed the cuts will come.
The representative who works to the chairman of the board, said labour costs had doubled since 2010.
Foxconn currently hires 1.3 million people and came under fire in 2010 after a number of its workers killed themselves.
The Reuters report said
revenue growth for Foxconn fell to 1.3 percent in 2013.
Analysts are predicting that the massive growth in sales of smartphones and tablets is bound to decline as saturation levels increase.
Both Apple and Samsung now face intense competition from own brand Chinese smartphone vendors offering units at rock bottom prices and with rock bottom margins.
While the Tame Apple Press rants that Nokia’s N1 Android tablet copies the iPad, it seems they are missing the real story – the N1 was entirely made by Foxconn.
Nokia has collaborated with Foxconn to bring its first Nokia-branded, Android-powered device. The outfit is planning to start working on smartphones as soon as the restrictions posed by the Microsoft deal expire in 2015.
What is weird is that it is a Nokia device which has been made by an outfit which is supposed to have sold its Devices and Services business to Microsoft in a desperate move to get out of that business. Instead, the N1 is made by Chinese contract manufacturing company Foxconn.
Nokia is nowhere in the picture. Foxconn will be handling the sales, distribution and customer care for the device. Nokia is licensing the brand, the industrial design, Z Launcher software layer and IP on a running royalty basis to Foxconn.
N1 is a bog standard tablet. The device is powered by Android 5.0, aka Lollipop. N1 showcases a 7.9-inch 2048×1536 resolution screen with a full anodized aluminium body. Tt is using the industry standard Type-C USB reversible connector, but otherwise it is a standard high-performance tablet.
It runs Intel’s 64-bit Atom Processor Z3580 at 2.3 GHz and will have 2GB of RAM and 32GB of storage. The device has an 8-megapixel main camera and a 5-megapixel front camera.
But it is also unlikely to be seen in the US. Nokia is targeting China with N1, where it will be available for an estimated $249 in the first quarter of 2015 — around the Chinese New Year.
Apple is worried about its manufacturing partners’ carbon emissions and its own rising water consumption.
The company has been doing its best to cut back sharply on greenhouse gas output with lots of solar power plants and other eco-friendly investments. . Observers say it has improved its practices and earned better scores from groups such as Greenpeace.
Apple released its 2014 environmental responsibility report, saying investments in renewable energy helped slash its carbon footprint from energy use by 31 percent from fiscal 2011 to fiscal 2013. That is despite power consumption soaring 44 percent over the same period.
Cynics said that it easy to do when you have outsourced most of your polluting manufacturing to China.
Apple agrees that its production partners Foxconn and Pegatron for the largest portion of its carbon footprint. It did not name them in the report of course.
There will be a 30.9 percent rise on tablets shipped in the second quarter of 2014 compared to Q2 2013 – that’s 61.42 million units.
Digitimes Research said that Apple will continue to rule the roost as the biggest vendor but its share is falling.
Of the 61.42 million units shipped, 13.5 million will be iPads, 24.62 million non Apple tabs, and 23.3 million will be white box jobbies.
The research outfit said Apple will have 22 percent of shipments, closely followed by Samsung with 20 percent. Other vendors lag behind.
Android devices will account for 58.9 percent of shipments, Apple’s iOS 35.4 percent and Windows way back with only 5.7 percent.
Shipments of LCD monitors hit 71.1 million units in the first half of the year, down 5.45 percent year-on-year. What’s more, the decline is expected to continue in the second half of 2013.
With a double-digit drop in PC shipments earlier this year, soft demand for monitors comes as no surprise. The market is hungry for mobile devices, there is plenty of demand for high resolution tablet screens, but not so much for traditional desktop monitors.
TPV still leads the market with a 35 percent share. Samsung ranks second at 12.7 percent, Qista came in third with 9.8 percent, while LG and Foxconn grabbed 9.6 and 7.6 percent respectively.
One way of getting around the slump is to focus on larger monitors and more value added products, reckons Digitimes. However, it is not very easy to come up with groundbreaking features in this market segment. Nobody will queue in front of a Regent Street shop for three days to buy a new monitor.
There is some progress though. Some vendors have started rolling out wider form factors, which should be popular among gamers. Curved screens are also around, but they are more of a gimmick at this point. UHD or 4K gear remains prohibitively expensive and it will be a few years before it goes mainstream.
Foxconn may be about to diversify and try its luck in the smartphone and tablet business, under its own brand. The company has been building iPhones, iPads and a range of other products for years and now it’s selling smart TVs, with a bit of help from 7-Eleven Taiwan.
Foxconn launched its TV assembly business in 2008 and it has expanded it in recent years with the acquisition of manufacturing facilities from Sony. It also bought a 50 percent stake in Sharp’s panel making plant in Japan, reports the Wall Street Journal.
Shoppers in Taiwan can already buy a range of Foxconn tellies and with gaudy ads like this one for a 40-inch smart TV, who could resist? However, the big news is that Foxconn may be about to launch smartphones and tablets of its own, or through some sort of deal with 7-Eleven.
This is not good news for Chinese white-box outfits. They have been performing quite well recently and demand for white-box smartphones and tablets is quite strong, often outstripping growth reported by big brands. If Foxconn enters the fray, the white-box crowd will face a lot more competition.
Foxconn has a lot of experience and capacity second to none, but it doesn’t actually make any crucial components used in smartphone or tablets. This is true of most smartphone outfits except Samsung.
There is no shortage of high resolution panels, cheap application processors, cameras or batteries. Depending on volume Foxconn could get much better prices than small white-box companies. However, it is still unclear whether Foxconn’s push will be limited to the 7 Eleven deal, or whether it will spread to other markets.
The company certainly has the muscle to pull off a global rollout, but this might not be necessary, at least not for now. Foxconn could instead choose to target a handful of emerging markets like China, markets that are not very saturated and that tend to scoop up white-box phones. The exact same markets Lenovo is gunning for. Such an approach could give Foxconn a foothold in the mobile industry through a back door, as it wouldn’t have to go head to head with Samsung or Apple.
Although the PC industry is going through a rough patch, some outfits are still doing quite well and one of them appears to be Gigabyte.
On Friday the company announced that it is on target to sell 20 million motherboards this year, its best result ever. Gigabyte apparently shipped 4.8 million motherboards in Q1 and by the end of the second quarter its shipments hit 9.9 million units.
“Obviously this is excellent news, proving not only that we’re doing a decent job of fighting our corner in a highly competitive market segment, but that the PC market as a whole is humming along nicely,” said Gigabyte.
Although it is nice to hear some optimism in an otherwise desperate market, we’re not sure the PC market “as a whole” is humming along nicely. However, Gigabyte’s motherboard business certainly is. Last year the outfit managed to gain quite a bit of ground and now it’s breathing down Asus’ neck. Asus and Gigabyte currently control about half of the worldwide motherboard market and, if it keeps growing, Gigabyte might overtake Asus pretty soon.
Smaller players like ASrock and MSI are far behind, with annual shipments under 10 million units, while ECS, Biostar, Foxconn and others are fighting over scraps.