JOHANNESBURG - Foxconn, the Taiwanese contract manufacturer that rose to global prominence as the manufacturer of the Apple iPhone, is trying to reinvent itself as smartphone sales plateau and Apple diversifies its supplier base.
The company, which kicked off a three-day event yesterday to celebrate its 30 years of doing business in China, already does much more than assemble goods for others.
It’s a top global producer of display screens, thanks to the acquisition of Sharp. Its far-flung activities include autonomous car start-ups and investments in cancer research.
But with its stock down almost 20percent since late last year, Foxconn, Taiwan’s second most valuable company with a market value of $51billion (R652.7bn), is under pressure to show that it can convert new initiatives into growth.
The Sharp purchase and a handful of more recent deals - including an agreement announced this week for Sharp to buy Toshiba Corp’s personal computer business for $36 million - indicates that a push into producing its own branded products is one part of the strategy.
Taiwan’s Foxconn is celebrating its 30 years of doing business in China. Photo: Reuters
Just as important, though, is a complicated plan to provide “integrated solutions” for businesses that include both sophisticated hardware and software services such as cloud computing, said Louis Woo, special assistant to Foxconn chairperson Terry Gou.
Woo called it a “new business model” that could be especially appealing to smaller companies and institutions like hospitals, who have sophisticated technical requirements that they often have trouble handling on their own.
“We have built data centres for many of our customers, but we're not known to provide data centre services,” Woo said. “In the future, since we're having all these pieces, we can put them together to provide a technical service to a business customer.”
The company is also betting that it can package its traditional expertise to sell “smart manufacturing” services, included fully automated factories, to other industrial companies.
Woo acknowledged that none of this would happen overnight - a view shared by sceptical analysts.
FILE- In this Nov. 3, 2017, file photo, the Apple iPhone X sits on display at the new Apple Michigan Avenue store along the Chicago River in Chicago. Warren Buffett’s company bought 75 million more Apple shares in the first quarter, giving it more than 240 million shares of the iPhone maker. Buffett told CNBC about the latest Apple stock purchases Friday, May 4, 2018 as tens of thousands of shareholders begin to arrive at Berkshire Hathaway’s annual meeting this weekend. (AP Photo/Charles Rex Arbogast, File)
And it has to be careful to keep current customers onside, in particular Apple - which is estimated to still generate around half of Foxconn’s total revenue.
Sharp is also selling $1.8billion worth of new shares to buy back preferred stock, which were issued to banks in return for a financial bailout.
Meanwhile, the parent company has huge capital needs for the core display business, with new plants in China and the US expected to cost almost $20bn between them.