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Hon Hai Precision / Foxconn in 2014 2009 to Supply Xbox Consoles for the Holiday Season, Shortly After Hon Hai Landed the Contract to Provide Sony with PS3 Consoles

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Hon Hai Precision / Foxconn in 2014 2009 to Supply Xbox Consoles for the Holiday Season, Shortly After Hon Hai Landed the Contract to Provide Sony with PS3 Consoles 1 quickly. The company was tapped by Microsoft in Hon Hai Precision / Foxconn in 2014 2009 to supply Xbox consoles for the holiday season, shortly after Hon Hai landed the contract to provide Sony with PS3 consoles. It also makes several products for Apple -- the iPod Nano music player, the iPhone, the iPad, and the iMac. In 2014, Foxconn contracted to provide 50% of HP’s “All-in- One” PC orders; HP also deals with original design manufacturers (ODMs) such as Quanta Computer, Pegatron Technology, and Wistron. Hon Hai is expanding its focus beyond consumer electronics, with interests in biotechnology, nanotechnology, and media content. The company is also targeting the automotive market in China Assembly at Foxconn plant in China (automotive connectors), smartbooks (mini-laptops Photo: Laptopmag.com that use smartphone technology), e-book readers for Hon Hai Precision Industry, commonly known by its the Taiwan market (Hon Hai makes about 80% of e- trade name, Foxconn, is the world's largest contract book readers, including the Amazon Kindle), and electronics manufacturer. Hon Hai has annual cell phones for Taiwan and China. revenue of about US$130 billion and more than 1.2 million employees, placing it among the world’s ten FIH Mobile largest employers (third largest private sector A Hon Hai affiliate, FIH Mobile (previously called employer, behind Wal-Mart and McDonalds). The Foxconn International Holdings) makes cell phone company may assemble as much as 40% of all handsets and similar devices. The company faced consumer electronics products sold globally. challenges after handset orders from major clients Hon Hai is headquartered in New Taipei City, such as Nokia and Motorola declined as they lost Taiwan. Chair Terry Gou founded the company in share to smartphones like the iPhone and devices 1974 to make plastic switches for TVs. Hon Hai based on Google's Android operating system. FIH became publically listed in 1991. sales declined from $10 billion in 2005 to $5 billion in 2013. FIH, began relocating some of its Chinese Products & Customers facilities in 2007, shifting some production to Northern China and India to reduce costs. FIH Hon Hai now manufactures computers, consumer posted losses in 2010 and 2012, but returned to electronics, communications, and other products profitability in 2013. In that year, FIH posted a such as connectors, cable assemblies, enclosures, substantial majority of its revenue in China, flat-panel displays, game consoles, motherboards, reflecting a major shift from the mid 2000s when servers, and TVs. Hon Hai also provides design most clients were based in Europe and the Americas. engineering and mechanical tooling services. The company now makes phones for Huawei and for Foxconn customers include or have included: Chinese startups such as Xiami, as well as products Taiwan: Acer for Vizio of the U.S. and Hunan TV of China. U.S.: Amazon, Apple, Cisco, Dell, Google, HP, In 2013, FIH Mobile signed on with struggling Microsoft, Motorola, Vizio smartphone maker Blackberry. BlackBerry, like Canada: Blackberry most phone makers, has long contracted production Japan: Nintendo, Sony to EMS firms. However, the new Blackberry Q20 Finland: Nokia (to be launched for the business market in 2014) and China: Huawei, Xiami Z3 (launched in Indonesia in 2014) phones were also Because of its size and sophistication, the company designed and distributed by Foxconn Technology is able to take on major new orders relatively Group. Foxconn reportedly spent on three months on the new products, compared to year-long design cycles for many phones. 1 Will Mitchell prepared this note from public sources, including Acquisitions & Internal Development CapitalIQ and Mergent Intellect [http://www.mergentintellect.com/index.php/search/companyDetai The company has expanded its product lines and ls/656064441/overview] (May 2014) design capabilities through a series of acquisitions. Examples include Finland-based Eimo (2004), 1 renamed Foxconn Oy, which makes plastic components, modules, system assembly, design, moldings for cell phone components. Foxconn also manufacturing, maintenance, and logistics. Through bought Taiwan-based Ambit Microsystems for $1.1 the eCMMS model, Hon Hai believes that its billion (2004); Ambit makes routers, modems, and Southern China campus offers both the world's networking equipment. Hon Hai acquired T a i w a n largest electronics manufacturing base and the Premier Image Technology in 2006. shortest supply chain. Hon Hai has increased manufacturing capacity Workforce & Management through acquisitions, such as a Motorola facility inb Mexico in 2003 and purchase of PC manufacturing A series of suicides by workers at its Shenzhen assets and associated logistics services in Hungary, facilities in 2010 was highly publicized. Foxconn Mexico, and the U.S. in 2008 from competitor responded by increasing wages and relocating some Sanmina-SCI as it exited the PC-making business. production facilities inland, closer to many workers’ homes. It also restricted the number of work hours Hon Hai subsidiary Innolux Display acquired flat- and hired a substantial number of new employees (in panel display manufacturer Chi Mei Optoelectronics 2011, the number of employees rose by 85%). in 2010, creating a company called Chimei Innolux. Through Chimei Innolux, Hon Hai now competes Hon Hai has a reputation for being highly with major display makers in South Korea and disciplined in its operations, as it seeks to meet Taiwan, which dominate the market. customer orders precisely in terms of quality, cost, and timeliness (QCT). The discipline is reflected in Hon Hai also actively undertakes internal in a hierarchical organization, with senior managers development as it prepares to enter new markets, playing hands on roles in many activities. The stating that it had paid too much for some company also emphasizes high IT security. Because acquisitions. The company is investing about $1 it contracts with many competing firms (e.g., Cisco billion to build a new manufacturing facility in and Huawei), Foxconn has created customer-specific China as part of an environmental protection units for major clients, which face strong non- technology initiative. The plant will develop and disclosure requirements. Foxconn views the ability make products for the alternative energy market, to meet customer QCT and security demands including LED backlights and LCD displays. Hon accurately as a major differentiating skill relative to Hai subsidiary Foxsemicon is working with its competitors. semiconductor manufacturing equipment maker Applied Materials to develop products for solar In 2013, Hon Hai began a restructuring that seeks to energy manufacturing equipment. streamline decision-making. Plans suggested that the restructuring would be based on ten key products: Growth and Strategic Positioning handsets, tablet PCs, notebook PCs, AIO (all-in-one) Foxconn grew rapidly in the 2000s, particularly as PCs, portable TVs, TVs, electronic whiteboards, its largest customer, Apple, grew. Foxconn used the LED tablet PC displays, networking, and cloud opportunity to grow strategically at the expense of computing. Hon Hai expects the restructuring to its rivals. By 2011, for instance, Foxconn employed help it focus more on OEM clients and end-market around 50,000 toolmakers and 2,000 workers to consumers. The company may spin off units such as design and fabricate molds and dies for components. satellite communication, sales channels, e- EMS firms typically do not possess such commerce, and flat panels as part of the changes. capabilities, instead buying most of the parts required to assemble products. By manufacturing key peripheral devices in-house, Foxconn provided Operations more value-added than any other EMS competitor. Primary source: http://en.wikipedia.org/wiki/Foxconn This has helped Foxconn surpass Taiwanese EMS rivals such Compal, Qantas, and Wistron, while Foxconn has factories in Asia, Europe, Mexico and maintaining a lead on other global firms such as South America. Flextronics in Singapore, the second largest EMS. China Foxconn now promotes what it calls “eCMMS”, Foxconn has 13 factories in nine Chinese . which stands for “e-enabled Components, Modules, cities—more than in any other country Moves, and Services”. eCMMS is an integrated Foxconn's largest factory worldwide is in business model that includes mechanical, electrical, Longhua, Shenzhen, where hundreds of and optical capabilities. The skills cover solutions thousands of workers (varying counts include ranging from molding, tooling, mechanical parts, 230,000, 300,000, and 450,000) are employed at 2 the Longhua Science & Technology Park, a walled campus, sometimes referred to as "Foxconn City" or "iPod City". Covering about 1.16 square miles (3 square km), it includes 15 factories, worker dormitories, a swimming pool, a fire brigade, its own television network (Foxconn TV), and a city center with a grocery store, bank, restaurants, bookstore, and hospital. While some workers live in surrounding towns and villages, others live and work inside the complex; a quarter of the employees live in the dormitories, and many of them work up to 12 hours a day for 6 days each week. Another of Foxconn's factory "cities" is Zhengzhou Technology Park in Zhengzhou, Henan province, where it is reported 120,000 employees work. Foxconn continues to expand, and planned factories include sites at Chengdu in Sichuan province and Wuhan in Hubei province. Brazil: The company’s facilities in South America are located in Brazil. These include mobile phone factories in Manaus and Indaiatuba, plus sites in Jundiai, Sorocaba, and Santa Rita do Sapucaí. Europe: Foxconn has factories in Hungary, Slovakia, and the Czech Republic. It is the second-largest exporter from the Czech Republic. India: Foxconn has operational units in the Special Economic Zone of Chennai, Tamil Nadu. Japan: Foxconn and Sharp Corporation jointly run two plants manufacturing large-screen televisions in Osaka. In August 2012 it was reported that Sharp, while doing corporate restructuring and downsizing, was considering selling the plants to Foxconn, which was believed to be receptive to the plan.
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