Following the announcement that Foxconn Electronics will collaborate with Innolux to invest roughly US$2.8 billion to construct new 6G facilities in Taiwan geared at producing LTPS technology for high-end smartphones, rumors have been spreading in the market as to which clients the two companies intend to target.
Apple has been cited from various news sources in China and Taiwan as the most likely candidate due to its relationship with Foxconn. Foxconn chairman Terry Gou has stated over the years that the company is working to improve its supply chain integration for Apple products, and industry sources have stated that Innolux is hoping to re-enter the Apple panel supply chain after a reported falling out due to technology issues.
Gou's remarks, however, have been followed by what seems to be an increasing lack of enthusiasm for Apple. The chairman has recently stated that Apple orders to the company are either hot or cold, fluctuating to the point where Foxconn and various other supply chain members feel it is difficult to rely too much on Apple.
It may be no surprise then that other reports are starting to pop up over the past week in China. Taiwan and Japan media have reported that Xiaomi Technology in fact will likely be the target for the Foxconn and Innolux collaboration. Xiaomi, which shipped 26.11 million smartphones in the first half of 2014 and aims to ship a total of 60 million units for all of 2014, plans to further develop its business model in countries outside of China moving into 2015, and expects its smartphone shipments to reach 100 million units next year, increasing more than 66% from 2014.
The China-based smartphone maker currently sources most of its panel supply from Japan-based makers and is hoping to have further access to LTPS TFT LCD technology in upcoming years, as it aims to expand its global market share. Xiaomi currently relies on China panel makers for entry-level and mid-range smartphones but needs outside makers to fulfill high-end panel demand.
It would be surprising, however, if Apple was not at least in part of the picture. The firm needs a new source of panel supply as it constantly faces supply issues from makers due to low yields and other technological bottlenecks. If Apple could gain access to a more integrated supply chain, it could prove beneficial for both Apple and Foxconn, otherwise the move might in fact further help Xiaomi push to the top as a leading smartphone vendor.