Hon Hai Precision Industry, also known as Foxconn Electronics in the Western world, is an important variable in Apple’s seemingly unstoppable rise to the technology throne. For years they’ve been Apple’s long-standing contract manufacturer, their fortunes closely tied to the success of Apple’s gadgets and computers they manufacture. “We’ve helped Apple make a lot of money. If our customers make money, then we can also make money”, CEO Terry Gou recently toldBloomberg.
Even though Foxconn predominantly makes mobile gadgets for Apple such as iPhones, iPods and iPads, they are determined not to share orders from their #1 client with anyone, especially competition. In a revealing note this morning, Asian trade publication DigiTimessays Foxconn has exerted its long-standing relationship with Apple to “persuade” the California firm not to share iPad 3 orders with rival Pegatron Technology, an Asustek spin-off:
Apple has reportedly been trying to add a second manufacturer for iPad 3 in addition to Foxconn, with Pegatron indicated to be the potential contender, the sources noted. However, Foxconn has exerted its efforts to protect its orders and apparently has persuaded Apple to not shift some of its iPad orders to other contractors for the moment, the sources added.
It was recently reported that Apple is looking to add Pegatron as a second iPad manufacturer.
Apple likes to source parts and commission multiple manufacturers in order to both reduce its exposure to a single partner and let the market forces work out the best price. This little tidbit reveals more than meets the eye. When was the last time you heard of any company “persuade” Apple or dictate terms, especially component suppliers or contract manufacturers? It’s always the other way round. The smallest misstep is usually enough for an Apple partner to fall out of favor with the company. This just shows how powerful Foxconn has become.