Foxconn

Foxconn is the world's largest manufacturer of electronics (electronic components and finished products), mainly a direct contractor under contracts with other companies.

Hon Hai is known as Apple's electronics manufacturer, including the iPhone and iPad. As of 2016, orders from the Apple company form over 40% of Hon Hai's total revenue.

Performance indicators

2017: First profit drop in 9 years

For the 12-month reporting period, which ended on December 31, 2017, Foxconn Technology Group's net profit amounted to Taiwan $138.7 billion ($4.76 billion at the exchange rate as of April 2, 2018), which is 7% less than a year earlier. The last time before that, the profits of the Taiwanese contract electronics manufacturer fell in 2008.

Foxconn profits fall for first time since 2008 due to iPhone X

The financial regression is caused by difficulties in the production iPhone of X (which problems are not specified), due to which the smartphone went on sale late - in early November, while in previous years new ones smartphones Apple appeared in stores in September. However, Apple itself, citing analysts, Canalys stated that the iPhone X was the most popular smartphone on the New Year holidays.

Apple orders still generate more than half of Foxconn's revenue, so the US company's performance is reflected in the Taiwanese partner's business. However, Foxconn is looking to reduce its reliance on the contract gadget business and is looking for new ways to raise funds. Among the measures is the listing of a subsidiary of Foxconn Industrial Internet Co. (specializing in cloud services and smart production technologies), which, according to experts, could cost $43 billion with $56 billion in capitalization of Foxconn itself. The funds received from the IPO are planned to be invested in cloud products, 5G technologies and smart manufacturing.

In 2017, Foxconn's revenue increased by 8% compared to 2016, amounting to 4.7 trillion Taiwan dollars ($161.3 billion). Foxconn was unable to boost profits despite selling 352.5 billion yen ($3.1 billion) worth of Sharp shares to ES Platform in December, which was created in collaboration with Foxconn employees.^[1]

History

2024: Apple laid off 50% of workers at factories and replaced them with robots

At the end of June 2024, it became known that Apple is reducing the number of workers in factories by replacing them with robots. In particular, up to 50% of employees will be laid off on the lines of the final assembly of the iPhone, and automated installations will take over their tasks.

The order to halve the number of personnel at assembly sites, according to The Information, came from Sabih Khan, senior vice president of operations at Apple. The decision is said to have come after violent clashes between iPhone assemblers and police near the Foxconn plant in November 2022. Then, against the background of the COVID-19 pandemic, employees of the enterprise, dissatisfied with working conditions and lack of food in canteens, staged a riot.

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In order to reduce the total number of personnel, as noted, Apple resumed projects to automate supply chains and production, which "were previously mothballed due to high initial costs." For example, equipment needed to automate iPhone production could cost hundreds of millions of dollars annually.

It is said that Apple, despite the difficulties, managed to significantly automate the process of final assembly of the iPhone 15. Thus, robotic systems are entrusted with the installation of metal fasteners and flexible printed circuit boards. Thanks to automation, Apple reduced the number of workers for some tasks by 30% by mid-2024, according to one of the employees of the iPhone manufacturing partner.

In addition to its own automation capabilities, Apple makes strategic acquisitions of companies that specialize in related technologies. For example, DarwinAI and Drishti were bought, developing AI optimization tools and video analytics, respectively.^[2]

2023

Stock price collapse after investigation opens against company in China

In October 2023, Chinese authorities are conducting a series of arrests in various industries and are investigating Foxconn Technology Group, a crucial partner of Apple Inc. and one of the largest employers in China.

On October 23, 2023, shares of Hon Hai, Foxconn's core division, fell the hardest in more than 3 months. Shares of Foxconn Industrial Internet Co., a major subsidiary, fell 10%, the biggest drop in the company's history. Luxshare Precision Industry Co., Foxconn's rival based in China, rose 4.9%.

Foxconn has created a space company

In mid-October 2023, it became known that Foxconn, one of the world's largest contract electronics manufacturers, had formed a subsidiary called Pearl. This enterprise will be engaged in the implementation of initiatives in the space sector. Read more here.

The founder's departure from the board of directors

Founder of Hon Hai Precision Industry Co. (Foxconn) Terry Gou, running as an independent candidate for Taiwan's presidency, made the decision to leave his company entirely. Read more here.

Electric vehicle company launch

Foxconn Technology Group has appointed a former Nidec Corporation chief strategy officer for its electric vehicle facility, Foxconn Electric Vehicle Co. This became known at the end of January 2023. Read more here.

2022

Rebellious workers were offered $1.4 thousand each as compensation

At the end of November 2022, it became known that the management of Foxconn was ready to pay $1.4 thousand to protesters at the Apple plant in Zhengzhou if they immediately left the plant and left home.

Foxconn management said the amount paid would help employees get home. Many of the 200,000 workers at the Foxconn plant in Zhengzhou came from other regions or countries. The administration also hopes to end protests at the plant when disgruntled workers leave it.

Rebellious Foxconn workers offered $1,400 in compensation

On the morning of November 23, 2022, workers at the Foxconn plant ran out of dormitories and confronted numerous security guards dressed in white protective suits. Workers smashed surveillance cameras and windows at the factory site. To the cries of "Fight, fight!" the crowd made its way through the barricades, bypassing the guards. Several workers were injured.

The police arrived at the scene and at some point several people surrounded the police car and began to rock it, shouting incoherently. The protest, according information to Bloomberg, one of the factors that caused the riots was that the workers learned that they would not receive the higher salary promised to them if they did not stay in the factory until March 2023, as well as because of fears of extending quarantine PEOPLE'S REPUBLIC OF CHINA coronavirus in infection (). COVID-19

The payment of $1.4 thousand was supposed to compensate people dissatisfied with this restriction for their passage home, but on November 24 there was a computer failure. On November 25, 2022, Foxconn apologized for an "input error" that might have made it appear that some employees had been paid less than promised, adding that it would stick to contractual obligations.

Due to coronavirus restrictions, the Foxconn plant in Zhengzhou is operating at low performance. In November 2022, Apple already warned of a reduction in deliveries of its premium iPhones - just on the eve of the peak of the festive season.^[3]

Workers clash with security at Apple's main iPhone factory in China

Furious protests erupt at Apple's main iPhone factory in China in November 2022

Hundreds of Foxconn Technology Group workers clashed with security officials amid tensions following nearly a month of tough restrictions designed to quell the Covid-19 outbreak.

Plant closures due to heat

On August 14, 2022, due to the extreme heat in China, the work of component manufacturing and laptop assembly enterprises in Sichuan province and Chongqing Municipality was disrupted, which creates the possibility of further problems in the supply chains of equipment. The closures came as a result of a blackout ordered by the Chinese government.

China's Department of Economics and Information Technology in Sichuan province has issued blackout notices that prioritized residents' access to an electric grid strained by the heatwave. Some measures to reduce electricity consumption have been in place in the area since late July 2022. The latest government notice provides for stricter measures for industrial consumers between August 15 and 20, 2022 in 19 cities in the region.

Computer makers in China shut down factories in heatwave

Sichuan is the center for the production of laptops, as well as lithium batteries used electric vehicles in many mobile devices. The blackout will stateMEDIA, have only a limited impact on production, according to Chinese supplier Foxconn. At the company's factory in Chengdu, located in Sichuan province, watches and computers are assembled. Apple iPhone produced in other parts of China, mainly in Zhengzhou and Shenzhen. PC component suppliers, Quanta Compal Inventec and also have factories in the affected cities.

To avoid the possibility of large-scale problems in the network, dispatch services create conditions for unloading power lines. In particular, with certain indicators close to critical, one has to resort to temporary disconnection from the power supply of certain residential areas and industrial facilities, said Xuying Chen, Minister of the Sichuan Department of Economics and Information Technology.

Sichuan reportedly relies on hydroelectric power to provide more than 80% of its electricity, but drought has reduced production as demand for air conditioning has risen to pacify temperatures that have topped 38C in recent days^[4]

Cyberattack on a plant in Mexico

On June 1, 2022, it became known that LockBit 2.0, using the ransomware of the same name, announced that it had successfully attacked a Foxconn plant in Mexico. Attackers threaten to post stolen information on the network on June 11.

Information from the LockBit website.

It is not yet clear whether the ransomware attack affected the factory's operating technology systems.

This is not the first time Foxconn has suffered from ransomware. In ON December 2020, the company confirmed that some of its systems USA in were subjected to a cyber attack after a ransomware group DoppelPaymer began posting stolen items online. files The attackers demanded 34 million dollars ransoms in. bitcoins

In February, the FBI published indicators of compromise for LockBit 2.0 attacks and noted that operators of this malware penetrate corporate networks by buying access to victims' networks or using uncorrected vulnerabilities and zero-day exploits^[5] of^[6].

Suspension of work in Shenzhen, China due to the outbreak of COVID-19

Suppliers Apple Foxconn and Unimicron Technology Corp on March 14, 2022 announced the suspension of work in Shenzhen, China, after they introduced strict measures to contain the COVID-19 outbreak.

Shenzhen, known as Silicon Valley, China is undergoing mass testing after recording dozens of cases of coronavirus infection. Officials suspended the public and transport urged people this week to work whenever possible. remotely

According to company representatives, the temporary shutdown of the Shenzhen plant began in accordance with the updated local government policy on COVID-19, the date of resumption will depend on the local government.

Foxconn also demanded that all employees undergo tests for coronavirus infection and take other measures to ensure health and safety. It is possible that the government will allow companies to work if they can create a closed management system in which employees will live and work in a bubble cut off from society. Such a system operated during the Beijing Winter Olympics.

Most of the production of the Foxconn iPhone in China is concentrated at the Zhengzhou plant in central China, while enterprises in Shenzhen are important production bases for the company, where a total of about 200 thousand people work.

2021

Buying a factory to make electric vehicles

In November 2021, Foxconn acquired Lordstown Motors, which is located in Lordstown, Ohio. The plant was previously owned by American General Motors. Foxconn wants to take 10% of the electric vehicle market, producing entire vehicles or components. Read more here.

Buying a processor plant from Macronix International

In early August 2021, Foxconn, a contract iPhone manufacturer, acquired the processor plant from another Apple supplier, Macronix International. The buyer intends to use this enterprise for the manufacture of components for electric vehicles. Read more here.

Reduced investment in Wisconsin plant construction

At the end of April 2021, Taiwanese electronics manufacturer Foxconn almost abandoned the construction of a $10 billion plant in Wisconsin, which Trump in 2017 called the "eighth miracle of the world," capable of reviving technological production in the United States. It is known that Foxconn will reduce the planned investment to $672 million and reduce the number of new jobs to 1,454 from 13 thousand.

When Trump's trade policies threatened Foxconn's cash cow - making Apple's iPhones in China for export to America - a deal with the state of Wisconsin was good for the company. In 2017, Foxconn, the world's largest contract manufacturer of electronic devices, proposed the creation of a production town with an area of ​ ​ 20 million square meters. feet in Wisconsin. The plant was expected to assemble state-of-the-art flat-panel displays for TVs and other devices. If the deal took place, it would become the largest in terms of attracting foreign investment in US history.

Foxconn plans to reduce investment in the construction of a plant in Wisconsin to $672 million, as well as the number of new jobs to 1454 from 13 thousand.

But even some Foxconn executives were skeptical of the plan from the start, pointing out that Wisconsin and nearby states don't have any of the critical suppliers needed to make flat-panel displays. The plan was also resisted by the local population, who condemned the terms of the deal, which allowed the company to acquire and demolish houses. As of 2019, the city in which the plant was supposed to be located paid just over $152 million for 132 properties to make way for Foxconn, as well as $7.9 million for residents to move.

Foxconn said the new agreement would allow it to "flexibly leverage business opportunities in response to changing global market conditions." The company said "initial forecasts used in negotiations in 2017 have now changed due to unforeseen market fluctuations."^[7]

2020

Ransomware Virus Attack

In early December 2020, it became known that the Taiwanese electronics manufacturer Foxconn was the victim of a ransomware virus attack. The hacker group DoppelPaymer demanded $34.7 million in bitcoin from the company for access to blocked servers and backups.

The attack on the North American enterprise Foxconn, located in Ciudad Juarez (Mexico), took place on November 29. The hacker group DoppelPaymer encrypted about 1,200 servers, stole 100 gigabytes of unencrypted files, and deleted 20-30 terabytes of backups. According to BleepingComputer, encryption affected only the North American segment of Foxconn and was not focused on workstations.

Foxconn survived ransomware virus attack

Your files, backups and shadow copies will not be available until you pay for the decryption tool, "DoppelPaymer officials wrote in a buyout memo that appeared shortly after the attack on Foxconn servers. - If no contacts are established within 3 working days after infection, the [first] part of the data will be posted [publicly available]... All other data will forever become inaccessible to you.

Along with the ransom demand, DoppelPaymer gave the company a link to the payment site and recalled that "this page and your decryption key will expire 21 days after the system is infected."

Foxconn's CTBG MX plant in Mexico opened in 2005 and is used by Foxconn to assemble and deliver electronic equipment to all regions Northern and. South America After the attack, virus the institution's website stopped working and shows visitors an error message.

DoppelPaymer is known for gaining a foothold in the city network of Florence (Alabama) in May 2020, and in June 2020 launched a ransomware virus into it, completely disabling the city's email system. The mayor's office paid $291,000 to unlock the data.^[8]

Robots in iPhone factories turned out to be worse than humans

In early June 2020, it became known that robots at Apple factories cope with their tasks worse than humans. Apple, in collaboration with Foxconn, has experimented with automated iPhone assembly, but tests have shown that robots are not amenable to the most complex elements of the process.

In 2012, Apple executives, including Tim Cook China the CEO, attended a meeting at where they were shown a video of an experimental robotic assembly line. iPad Despite the political risk, Apple and Foxconn began testing the automated build line. Foxconn chairman that Terry Gowan expected Foxconn will use up to a million robots in its factories by 2024

Apple failed to replace humans with robots

However, the team faced several problems. Building a robot that can mount screws is one of the industry's toughest tasks. The robot must take the screw at a certain angle and align it with the hole using several cameras. Apple uses screws so tiny that robots are not able to assess the resistance of the material when trying to twist them.

Unlike robots, human workers feel great about hand resistance and can tell when a process is going wrong. Testing also found that Apple's technical requirements for applying glue to products are often measured in millimeters, and that well-trained Chinese workers applied glue more accurately than their robot counterparts.

It is also reported that Apple tried to automate the production of the 12-inch MacBook, but during the first tests the conveyor system began to malfunction. The experiment was so unsuccessful that Apple had to postpone the release of the new MacBook for six months. However, automation has proved useful for less time-consuming work, such as testing devices. In addition, Apple managed to create an iPhone recycling robot called Daisy.^[9]

2019

Employees did not throw out defective parts, inserted them into new iPhones and earned $43 million

In mid-December 2019, Foxconn, which assembles an iPhone commissioned by Apple, launched an investigation into the fraudulent activities of its employees who resold defective parts for smartphones.

Major production lines owned by Foxconn supply thousands of units daily. Parts are checked for compliance with quality standards, and defective components are subject to disposal, according to the company's charter and agreement between the manufacturer and the customer. However, several managers from the company's factory in Zhengzhou did not dispose of faulty iPhone components, but used them to assemble new iPhones. Such devices then went on sale through illegal supply chains. For three years, a fraudulent scheme brought its organizers about $43 million in illegal profits.

Foxconn, which assembles iPhones commissioned by Apple, has launched an investigation into the fraudulent activities of its employees who resold defective parts for smartphones

Foxconn said in an official statement that the company had already taken the necessary measures to address the issue, including launching an internal investigation into the alleged incident. The manufacturer refrained from commenting further.

However, the media believe that representatives of the company are hushing up the real scale of the problem. The person who discovered the fraudulent scheme believes that Apple's losses as a result of such activities could have amounted to about $3 billion. The whistleblower is understood to have contacted Apple CEO Tim Cook directly and it is Apple's business audit team that is investigating the incident.

By December 2019, it is known that employees allegedly involved in the fraudulent scheme were suspended from work, and lawyers are preparing a lawsuit against them and are collecting the necessary documents to bring the case to court. Fraud victims are hoping for compensation.^[10]

Half of the iPhone is collected by schoolchildren

On June 9, 2019, it became known about violations at iPhone factories. Foxconn, which assembles smartphones commissioned by Apple, uses too many schoolchildren to work, according to the nonprofit advocacy group China Labor Watch.

An investigation found that in August 2019, the number of temporary employees (almost all are schoolchildren) in the Foxconn factory exceeded 50% instead of the permissible 10%. In 2018, the share of temporary employees was 55%.

Apple admits violation of Chinese labor laws in iPhone production

However, at the end of August 2019, many schoolchildren returned to classes and the number of temporary workers decreased to 30%, which is also illegal.

Apple, after an internal investigation, acknowledged the breach and said it was "working closely with Foxconn to address this issue." Foxconn Technology Group also admitted abuse of hiring temporary employees. 

China Labor Watch said Apple was shifting the costs of the trade war between China and the United States to workers and exploiting their labor.

Temporary employees are not eligible for paid sick leave, leave and social security, Bloomberg reported. While their salary may be higher than usual, they are paid on a short-term basis by a third party. Foxconn does not directly hire them, but uses the services of outsourcing firms. Temporary employees can move to the official staff after three months of work, but this opportunity was not provided to them.

International corporations have helped spur economic development in China, but they have also exploited loopholes in Chinese labor law, China Labor Watch said.

The organization has been studying Apple's manufacturing practices for ten years and receives numerous complaints from workers - they relate to exposure to toxic chemicals, verbal abuse, forced labor, etc.^[11]

Use of schoolchildren's labor at night

On August 8, 2019, it became known that Chinese schoolchildren are used in production "smart" speakers Amazon with numerous violations of labor laws. The Guardian was told about this by factory workers. The publication also received information from documents intended only for internal use at Foxconn (Amazon's assembly partner). electronic engineers

The publication says that hundreds of schoolchildren and students of technical colleges in the city of Hengyang were forced to work at night and overtime.

Amazon smart speakers are collected by schoolchildren at night. Teachers must force them to work under threat of dismissal

The management of enterprises did not put pressure on teachers, demanding that they encourage or force teenagers to recycle by any means. Teachers themselves receive remuneration from factories for attracting schoolchildren.

For each student, the company pays schools about $70 a month. In total, the plant employs about 900 teenagers aged 16 to 18 years. On average, they receive $2.34 per hour, and skilled workers - $2.86.

If children refuse to work extra hours, educators must apply for dismissal  on their own behalf, documents from the Foxconn meeting said.

Foxconn told reporters they were aware of the situation. The company admitted that in the past, weak supervision of the internship program led to such processing of schoolchildren. Foxconn representatives stressed that all interns received payments for additional working hours, but the very fact of such overtime was called unacceptable.

Chinese factories are allowed to hire young people as young as 16, but it is forbidden for them to work nights or overtime.

One of the schoolgirls told the publication that she first worked 8 hours a day on weekdays, but then she was transferred to a shift with six 9-hour days. She tried to refuse, but the teacher threatened to deteriorate grades and deprive the scholarship.^[12]

The head announced his resignation

In mid-April 2019, Terry Gou announced his resignation as chairman of Foxconn's board of directors and his candidacy in the Taiwan presidential election. Read more here.

2018

iPhone production in India

At the end of December 2018, it became known about the production of the most expensive iPhones in India. Foxconn Technology Group, which is Apple's main contract partner for phone assembly, will begin manufacturing the iPhone X, XS, XS Max and XR at a facility in the city of Sriperambudur (Tamil Nadu, southern part of the country) in early 2019. Read more here.

Foxconn buys Belkin for $866m

On March 27, 2018, Foxconn announced the acquisition of a manufacturer of accessories for to smartphones Belkin expand sales of branded products. The transaction value is $866 million. The entire amount will be paid from the buyer's own funds (without transferring part of its shares). More. here

2017: Enlisting trainee students to build iPhone X

Apple Corporation confirmed that one of its key production partners, Hon Hai Precision Industry Co., part of the Taiwanese Foxconn Technology Group, attracted trainee students to assemble flagship smartphones iPhone X, and they illegally worked overtime, Bloomberg reports on November 21, 2017. Read more here.

Foxconn also acknowledged that students were recycled at some of its factories, noting that it was against the company's own policies. At the same time, the company stressed that it has already taken measures to correct the situation and prevent this in the future.

2016

Foxconn bought the production of Microsoft smartphones

On July 9, 2016, it became known about Foxconn's intentions to buy Microsoft's production facilities in Vietnam.

According to Deal Street Asia, the deal will amount to $22 million. Production is located in northern Vietnam, in the province of Bacnin.

At Microsoft's Vietnam plant, Photo: Chung Hien/Vietnam + (2015)

Completion of the transaction is scheduled for the second half of 2016.

Replacement of 60 thousand workers with robots

On May 25, 2016, it became known that Foxconn replaced 60,000 workers with robots. Thus, the Taiwanese contract electronics manufacturer plans to reduce future costs and increase product production - primarily on orders from Apple.

According to the South China Morning Post, citing the head of the public relations department of the Kunshan city administration (Jiangsu province; here is the manufacturing center of the electronics industry) Xu Yulian, at one of the Foxconn plants the number of workers was reduced from 110 to 50 thousand people thanks to the introduction of robotic equipment.^[13]

iPhone manufacturer replaced 60 thousand workers with robots

Julian noted that Foxconn will strive to automate as many stages of the manufacturing process as possible, leaving people to perform more important tasks, such as research and development, as well as product quality control.

A Foxconn spokesman said that the company's management decided to actively implement robots due to the "financial inefficiency" of manual labor.

It is noted that about 600 high-tech companies with production in Jiangsu intend to follow the example of Foxconn. In 2015, they released about 51 million laptops and about 20 million smartphones.

According to Kunshan authorities, in 2015, 35 Taiwanese companies, including Foxconn, spent a total of 4 billion yuan ($610 million) on the development of artificial intelligence technologies.

Former head of the American representative office of McDonald's Ed Rensi in an interview with Fox Business said that raising the minimum wage to $15 per hour would make the purchase of robots worth $35,000 more profitable for production.^[14]

2015: Foxconn closes plant in Russia and invests in India

In early July 2015, HP and Foxconn closed a PC plant in Russia, in the village of Shushary, a suburb of St. Petersburg. The plant worked in a rented room, its own was not completed (the construction was frozen in 2009 after the crisis and at the beginning of 2013 the plant was a box of walls and ceilings). The reason for the failure is that the production and assembly of PCs in Russia became unprofitable for the company due to Russia's entry into the WTO and high production costs.

The company indicates that the decisive motive for the closure of the plant was the collapse of the Russian PC market in the first quarter of 2015 by 43.6% compared to 2014.

On August 9, 2015, it became known about Foxconn's plans to invest $5 billion in the construction of a plant in India. The investment will be carried out under the Made in India program, the purpose of which is to create and transfer production facilities to the country^[15].

Plans for the production of Foxconn in India are still unknown. The plant, which the company plans to build in this country, will employ about 50 thousand people. Setting up a factory in India would save on worker pay (India has lower salaries than China) and bring the emerging Indian consumption market closer.

According to media publications, Foxconn will create 10-12 production facilities in different states of India by 2020. The construction of data centers is also planned.

Notes