iPhone maker Foxconn is making room to switch to electric cars and redrawing some of its supply chains as it navigates a new era of icy Washington-Beijing relations.
Chairman and boss Young Liu says the future holds a lot for the Taiwanese firm. He said even as Foxconn shifts some supply chains away from China, electric vehicles (EVs) are what will drive its growth in the coming decades.
As US-China tensions rise, Mr Liu said, Foxconn must prepare for the worst. The 67-year-old Mr Liu according to report in his offices in Taipei, Taiwan’s capital said he hopes for peace and stability even as he thinks of the worst case that may happen in business.
The CEO sees the scenarios could include attempts by Beijing to blockade Taiwan, which it claims as part of China, or worse, to invade the self-ruled island. Noting that “business continuity planning” was already under way, and pointed out that some production lines, particularly those linked to “national security products” were already being moved from China to Mexico and Vietnam.
Mr Liu is hoping for fuel Foxconn’s next big bet of electric cars Built for families and priced for an aspiring global middle class, the shiny white SUV is one of several models manufactured by Foxconn.
“The reason why we think this is a great opportunity for us is that with the traditional gas engine, you have engines which are mostly mechanical. But with EVs, its batteries and motors,” he explains.
Foxconn, officially known as Hon Hai Technology Group started off in 1974, making knobs for TVs. Now it is one of the world’s most powerful technology companies, with annual revenue of $200bn (£158.2bn). It is best known for making more than half of Apple’s products, from iPhones to iMacs but it also counts Microsoft, Sony, Dell and Amazon among its clients.
For decades, it has thrived on a playbook perfected by multinational corporations – they design products in the US, manufacture them in China and then sell them to the world. That is how it grew from a small component-making business to the consumer electronics giant it is today.
With continual increase in global supply chains and ties between Washington and Beijing, Foxconn finds itself in an unenviable spot – caught between the world’s two biggest economies, the very nations that have powered its growth until now.
Taiwan is headquartered of Foxconn where iPhone is made creating around 60%, by some estimates. The factories in China make some of the most essential parts of the device – camera modules, connectors, even the back of the phone casing.
Foxconn’s hopes to capture about 5% of the global electric vehicle market in the next few years – an ambitious target given the firm has only made a handful of models so far.
Mr. Liu added, “It doesn’t make sense for you to make [EVs] in one place. Foxconn car factories will be based in Ohio in the US, in Thailand, Indonesia and perhaps even in India.
At the Moment the company will keep focusing on what it does best, making electronic products for clients. But perhaps not too far in the future, Foxconn will do the same for clients with electric cars.
