Apple has made plenty of headlines over its reported supply chain woes this year and now The Register has translated a new report from China Business claiming that Apple recently returned at least 5 million iPhones to Foxconn this year due to some kind of unnamed defect. The Register notes that “with a cost to manufacture of $US200 apiece, Foxconn is apparently preparing to take a hit of up to $1.6bn to cover the cost of making replacement handsets,” which would certainly be a major blow to the world’s leading smartphone manufacturer. The report of the returned iPhones comes after Foxconn earlier this month posted a 19% drop in year-over-year revenue that was attributable in large part to “disappointing” recent iPhone sales.
Just because the iPhone is still the world’s best-selling smartphone, that doesn’t mean its sales can’t be disappointing relative to expectations. Reuters reports that iPhone manufacturer Hon Hai, which trades publicly as Foxconn, reported a 19% decline in revenue compared to a year ago. What’s more, Reuters says that the decline is due primarily to “disappointing” iPhone sales over the past quarter and notes that revenue from building iPhones and iPads typically account for at least 60% of Foxconn’s sales. Recent estimates have suggested that Apple’s (AAPL) iPhone 5 has been selling below expectations but that the company is still in line to meet or exceed overall iPhone sales targets due to the continued strong demand for iPhone 4 and 4S models.
Hon Hai and its manufacturing subsidiary Foxconn are the subject of a bribery probe in China, the company confirmed on Wednesday. According to a statement given to The Wall Street Journal, authorities in China are investigating the alleged bribery of supply chain companies by Foxconn employees. “We are working with law-enforcement officials who we brought in to work with our own internal audit team as part of an investigation into allegations against a number of Foxconn employees related to illegal payments from supply-chain partners,” Hon Hai said in its statement. “We are also carrying out a full review of our policies and practices to identify steps we can take to strengthen such measures to further mitigate against such actions.” It is unclear how many Foxconn employees are involved in the alleged scheme. Foxconn is the world’s largest original device manufacturer, and it known most famously for building iPhones and iPads for Apple (AAPL).
It has been nearly a year since Apple (AAPL) CEO Tim Cook addressed the unsafe working conditions in the company’s supply chain factories. Following an investigation from the Fair Labor Association that found a number of Chinese labor law violations, Apple and Foxconn (2038) agreed to improve conditions. The companies planned a series of reforms, including reduced hours and significantly higher wages. Foxconn said that the majority of changes would go into effect by July 2013, however according to a report from The New York Times, some workers have already noticed some smaller changes taking place such as cushioned chairs replacing old wooden stools. More →
The rumor on Foxconn planning to open manufacturing plants in the U.S. is true. According to Bloomberg, Foxconn spokesman Louis Woo said, “We are looking at doing more manufacturing in the U.S. because, in general, customers want more to be done there.” Woo wouldn’t name clients, but in light of Tim Cook’s confirmation that Apple is investing over $100 million in manufacturing some Macs in the U.S. next year, it’s not difficult to deduce that the world’s most valuable company is a primary reason for Foxconn’s upcoming plans. More →
Foxconn has big plans for Brazil and the manufacturing giant just took another step toward realizing them. Parent company Hon Hai on Friday announced that subsidiary Foxconn CMMSG Industria de Electronicos has purchased more land in Brazil, AFP reports. The transaction with Toulouse Incorporacao will see Foxconn gain approximately 350 acres and it will cost the company $12.64 million. Foxconn said previously that it planned to invest $492 million in a new facility in Sao Paulo, and it currently runs four other factories in Brazil.
Foxconn announced in August last year that it was planning to have 1 million robots up and running in its factories within three years. As promised, the first batch of 10,000 “Foxbots” have already made an appearance in one Chinese factory, with 20,000 more planned by the end of the year. The Foxconn-built Foxbots are estimated to cost between $20,000 and $25,000, but reportedly aren’t good for anything beyond repetitive tasks that involve item “lifting, selecting and placement.” The mechanical arm-like Foxbots are likely not capable of producing products such as the iPhone 5 that require extremely intricate assembly. With 1.2 million employees, and 1 million robots planned, the big question is how many workers will actually be put out of work? After all, Foxconn will still need people to oil up the Foxbots if they ever malfunction.
Sony’s (SNE) $25,000 84-inch Ultra HDTV with 4K resolution might soon look puny compared to flatscreens that have even larger displays, according to a DigiTimes report. The report claims Foxconn could build 70-inch, 80-inch and even 130-inch panels with Ultra HD resolution in them. As a major investor in Chimei Innolux (CMI), Taiwan’s largest LCD maker, Foxconn’s goal is to build panels in sizes that don’t interfere with CMI’s max 65-inch Ultra HDTVs in 2013. Although Foxconn CEO Terry Gou backpedaled on a statement his company was building Apple’s (AAPL) iTV, it wouldn’t shock us if the Cupertino-based company is involved, given all the rumors around it working on a Siri-powered TV.
While it’s unlikely that iPhones will have “Made in the U.S.A.” proudly stamped on them anytime soon, that doesn’t mean American tech manufacturing is dead. Unnamed sources have told Digitimes that iPhone manufacturer Foxconn has “plans to establish manufacturing plants in the US and is currently conducting evaluations in cities such as Detroit and Los Angeles.” Although these plants aren’t likely to churn out iPhones, they may assemble LCD TVs and other electronics that can be produced more through automated machines and require less human labor. Digitimes also says that Foxconn may be planning more training courses for American engineers that would give them the opportunity “to learn the Chinese language” as well as “first-hand expereince [sic] in the manufacturing process, and a training that can be helpful after they return to the US.”
Still can’t get an iPhone 5? It might be Apple’s (AAPL) fault and not just a display production shortage. According to The Wall Street Journal, a Foxconn official who wished to remain anonymous said the “iPhone 5 is the most difficult device that Foxconn has ever assembled” and even now, workers are still learning how to manufacture the smartphones to meet Apple’s high standards. More →
After conducting an internal investigation, Foxconn (2038) issued a statement saying it discovered some of its interns at its Yantai facility in the Shandong Province were as young as 14-years-old, two years under China’s legal employment age. The company responsible for mass-producing some of the world’s most popular gadgets including the iPhone 5 told CNET in an emailed statement: “This is not only a violation of China’s labor law, it is also a violation of Foxconn policy and immediate steps have been taken to return the interns in question to their educational institutions.”
4,000 Foxconn workers on strike over iPhone 5 quality control measures, inadequate training [updated]
China Labor Watch is reporting that another Foxconn strike broke out on Friday at the Zhengzhou factory in China. The report says 3,000 to 4,000 Foxconn (2038) are complaining about Apple’s (AAPL) demanding quality standards for the iPhone 5. China Labor Watch further reports that workers are under immense pressure to deliver iPhone 5’s without receiving adequate training on how to improve yield rates.
Approximately 40 people were injured and 20 were arrested when a massive riot broke out Sunday at Foxconn’s (2038) Taiyuan plant in Northern China. Details are still conflicting, however early reports from Engadget suggest the incident began after a security guard struck a worker during anti-Japan protests at around 10:00 p.m. local time on Sunday. The plant, which manufactures magnesium alloy components and LED lighting products, has been closed following the incident. Reports suggest as many as 2,000 workers were involved. Foxconn issued a preliminary statement suggesting the incident was triggered by “a fight among workers from different production lines,” but the company noted it is “still investigating the cause of the fight and the number of people involved.” A video of the riot follows below. More →