In an exclusive interview with the BBC, Foxconn chairman and boss Young Liu shared his thoughts on the future of the Taiwanese firm. He discussed the company’s plans for growth and how it is preparing for potential challenges.
Electric Vehicles to Drive Growth
According to Mr. Liu, electric vehicles (EVs) will be a major driver of Foxconn’s growth in the coming decades. This comes as the company shifts some of its supply chains away from China.
Preparing for the Worst
With tensions between the US and China on the rise, Mr. Liu stated that Foxconn must prepare for the worst. He expressed hope that the leaders of both countries would keep peace and stability in mind, but as a CEO, he must consider what could happen if the worst-case scenario were to occur.
Business Continuity Planning
Mr. Liu revealed that “business continuity planning” is already underway at Foxconn. Some production lines, particularly those linked to “national security products,” are being moved from China to Mexico and Vietnam. This likely includes servers used in data centers that can contain sensitive information.
Foxconn’s History and Growth
Foxconn, officially known as Hon Hai Technology Group, was founded in 1974 as a maker of TV knobs. Today, it is one of the world’s most powerful technology companies, with an annual revenue of $200bn (£158.2bn). The company is best known for making more than half of Apple’s products, but it also counts Microsoft, Sony, Dell, and Amazon among its clients.
Caught Between Two Superpowers
As global supply chains adjust to souring ties between Washington and Beijing, Foxconn finds itself caught between the world’s two biggest economies. The US and China are at odds over many issues, including trade and the war in Ukraine. One of the biggest potential flashpoints is Taiwan, where Foxconn is headquartered.
The Future of Foxconn
Despite these challenges, Mr. Liu believes that Foxconn’s business model is far from over. The company relies on US designs and Chinese manufacturing and creates a large number of jobs in both countries. Mr. Liu believes that both governments want companies like Foxconn to continue operating.
The Covid Challenge
Covid-19 is another reason companies might consider “de-risking” from China. A mix of harsh Covid policies, a lack of space for quarantine, and the infectiousness of the Omicron variant led to protests and riots at Foxconn’s factory in Zhengzhou in late 2022. Hundreds of workers fled the campus on foot due to fears of the virus spreading.
Mr. Liu stated that the scenes that played out were caused by a lack of transportation due to Beijing’s zero-Covid policy. However, he admitted that he should have handled things differently. If the same situation were to occur again, he would stop production altogether, even at the risk of upsetting clients like Apple.
Foxconn’s Importance to Clients
Foxconn is essential to its clients, such as Apple. Around 60% of the iPhone is made by Foxconn, including essential parts like camera modules and connectors. This expertise is what Mr. Liu hopes will fuel Foxconn’s next big bet: electric cars.
Electric Cars: Foxconn’s Next Big Bet
Mr. Liu sees electric cars as a natural fit for Foxconn due to their reliance on batteries and motors rather than mechanical engines. The company hopes to capture about 5% of the global electric vehicle market in the next few years. To achieve this goal, Foxconn will base its car factories in Ohio in the US, Thailand, Indonesia, and possibly India.
Diversifying Production and Supply Lines
With its foray into electric cars, Foxconn is diversifying not just its production but also its supply lines. Mr. Liu believes that both of these factors hold the key to the company’s future.