At the Foxconn 50th anniversary banquet, Apple CEO Tim Cook conveyed his congratulations via video message. He mentioned that products which would typically take several months to complete were accomplished by Foxconn in just a matter of days. (Founder) Terry Gou has redefined the limits of mass production, compelling major brands that have defined products over the past three to four decades to take notice.
The "Big Five" electronics companies of Taiwan do not include Foxconn, as their combined revenue amounts to only three-quarters of Foxconn's. However, together with the Big Five, Foxconn has collaboratively shaped a global supply chain that inevitably relies on Taiwan!
The host of the banquet is (current Foxconn chairman) Young Liu. How does he define Foxconn in the "post-Gou era?"
I often say that definition, positioning, and pricing are the three key elements in running my business. So, how does Liu define his era? Foxconn is a conglomerate with annual revenues exceeding US$200 billion. To truly understand a company, we should return to the essence of the business when analyzing it.
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In the past, industrial development followed a "top-down" approach, where brand owners and technology-leading companies dictated the technical specifications. Contract manufacturers would then follow suit, operating based on orders and contracts. Foxconn originated in the PC era, dodging the numerous pitfalls of the dot-com bubble, and found opportunities in big data and cloud services. Essentially, the "top-down" mindset and solutions, which are very compliant and adept at following instructions, remain highly effective.
As we enter the era of AI, business opportunities at the top level still exist. However, they are becoming increasingly concentrated, with fewer companies from other countries having the capability to compete. Taiwanese businesses are like suppliers of picks and shovels to the California gold fields.
They earn modestly, without reaping huge profits. However, once they establish economies of scale and accumulate sufficient manufacturing experience, it becomes quite challenging for companies from other countries to surpass them on a large scale. Foxconn and the top five electronics companies are not just facing the challenge of securing orders; rather, they need to find a new position within the IoT ecosystem by adopting a "bottom-up" business model..
About
This article is an excerpt from Colley Hwang's new book "SEMI Country: Trump Storm, and the Island of No Significance". The e-book version is now available for purchase on Amazon Kindle and Rakuten Kobo.
Article edited by Jack Wu
