Hon Hai, Foxconn: More than Apple's iPad, iPhone

Summary:Hon Hai Precision Industry---a company best known for making Apple products like the iPad---outlined production improvements, data center plans and diversification efforts into new markets.

Hon Hai Precision Industry---a company best known for making Apple products like the iPad---outlined production improvements, data center plans and diversification efforts.

The buzz about Hon Hai, which makes the iPad with its Foxconn subsidiary, was that Chairman Terry Gou said that Apple's tablet have hampered margins because they are "difficult to make." Hon Hai expects margins to improve in the latter part of 2011 though and overall the difficulty of making the iPad is the least of the company's worries.

If you zoom out a bit Apple accounts for about a quarter to a third of total sales. That's a big chunk of change from an Apple-Hon Hai relationship that goes back 30 years, but there's more to the company. KGI analyst Angela Hsiang said that Hon Hai's Gou is focused on industrial components, emerging markets, automating production and cloud computing.

Barclays Capital analyst Kirk Yang noted the following from Hon Hai's annual shareholder meeting:

  • Gou said margin declines are largely attributed to relocating production to inland China. That move included several hundred thousand people. In other words, Gou's company moved a city. Meanwhile, Hon Hai had duplicate iPad production facilities during the relocation. That fact---more than the difficulty making iPads---hurt margins more than anything.
  • In the long run, Hon Hai is focusing on cooperation with Japanese companies like Sharp, Hitachi and Canon, making solar equipment eventually and improving management skills.
  • Servers are also a key business. Hon Hai makes two-thirds of the globe's servers.
  • Hon Hai doesn't plan on ditching notebook manufacturing.
  • Hon Hai has $12 billion bet on Brazil over the last five years.
  • And the company is investing heavily in its data center capacity so it can take order, design and manufacture goods in a 12 week cycle in an energy efficient manner.

Overall, there's much more to Hon Hai than Apple.

Topics: Storage, Apple, Data Centers, Hardware, iPad, Mobility

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.