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Hon Hai chairman Terry Gou says Apple products are "very difficult to make"

by Kelly Hodgkins Jun 9th 2011 at 1:00PM

Hon Hai, parent company of Foxconn, is blaming Apple for its poor financial performance over the past two quarters. Chairman Terry Gou confirmed the Chinese company invested heavily in its manufacturing plants to keep up with Apple's demand. He said Apple devices were "very difficult" to make.

The company's profit gains were also hit hard by Foxconn wage increases, which were introduced following a rash of employee suicides and negative reports over the past few years. Gou hopes to turn things around in the last half of the year when its investment in manufacturing and lucrative Apple contracts should begin to pay off.



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Hon Hai, parent company of Foxconn, is blaming Apple for its poor financial performance over the past two quarters. Chairman Terry Gou...
 

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Vertigo

Actually I think the poor wording in the TUAW article hear is to blame for some of the comments hostility.

Reading the source article, he doesn't appear to be "blaming Apple" for anything, he is just explaining why their profits are down now, but will pick up later.

June 09 2011 at 4:50 PM Report abuse +1 rate up rate down Reply
J.O.

The "rash of employee suicides" is ridiculous, as well. If you look at how many employees Foxconn has in that plant, roughly 350,000, the percentage of suicides is less than that of the San Francisco Bay Area.

June 09 2011 at 2:23 PM Report abuse +1 rate up rate down Reply
1 reply to J.O.'s comment
sm_19

Foxconn have over 1 million employees.

June 11 2011 at 11:27 AM Report abuse rate up rate down Reply
scottjl

i can imagine there are many other companies out there that would be happy to work on equipment for apple.

June 09 2011 at 1:45 PM Report abuse rate up rate down Reply
The Plaid Cow

I think you could translate "very difficult to make" as "has very high quality standards". When bidding on a manufacturing job, you must take into account the quality of the work that is expected--the higher the quality, the harder it is, and the higher price you must charge. Of course, if they bid too high, then they won't get the contract.

June 09 2011 at 1:39 PM Report abuse rate up rate down Reply
2 replies to The Plaid Cow's comment
wave9x

I totally agree - what he really wants to say is that Apple demands extremely high quality and they don't allow Foxconn to cut corners in order to reduce costs.

June 09 2011 at 1:50 PM Report abuse +2 rate up rate down Reply
cloudgazer

No I think he really means difficult to make. Apple puts FAR more effort into the design and into the manufacturing process than most manufacturers. Look at a unibody macbook then a half dozen random PC laptops and you'll see what I mean. Internally it's the same thing, the determination to make the product 1mm thinner often results in a more intricate and fiddly assembly process.

So this isn't exactly about quality standards, this is about intrinsically more complex product assembly processes. The high quality standards are probably a bigger deal for the component manufacturers.

June 09 2011 at 5:32 PM Report abuse +2 rate up rate down Reply
DotComCTO

That's a very foolish comment to make. Hon Hai & Foxconn determine the prices they charge for their work. So, Hon Hai either made a mistake or they were desperate for the business...or both. If they misjudged the costs involved, that's not Apple's fault.

June 09 2011 at 1:30 PM Report abuse -2 rate up rate down Reply
EmmEff

Is this not the lamest excuse you've ever heard?

Foxconn agreed to the manufacturing contract and now they're complaining that they are unable to fulfil it and be profitable? Methinks the persons who did the original contract should be blamed, not Apple.

June 09 2011 at 1:30 PM Report abuse -1 rate up rate down Reply
2 replies to EmmEff's comment
yrthegood1staken

"complaining that they are unable to fulfil it and be profitable"

No, they're explaining that it was a long-term investment. It caused two quarters to look bad, but the second half of the year will look better because of it. It makes perfect sense that this would happen and that the chairman would need to explain the details to placate stock holders.

June 09 2011 at 3:39 PM Report abuse +3 rate up rate down Reply
sm_19

The iPhone was brand new when the contracts got signed, they probably sold a few million in 2007, now look at them, selling 19 million iPhones last year, over 15 million iPads in 9 months, thats not including iPod's and their Unibody computers. its not easy keeping up with the demand.

June 11 2011 at 11:30 AM Report abuse rate up rate down Reply
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