Guo Taiming really wants Huawei, but the OEM order for Mate60 may not be compatible with Foxconn!

Tech 2023-10-07 02:12:39 Source: Network

Before reading this article, please click on "Follow" to facilitate your discussion and sharing, as well as bring you a different sense of participation. Thank you for your support!Introduction:Mobile phone OEM giant Foxconn hopes to collaborate with Huawei again, this time with the goal of OEM Huawei's highly anticipated Mate60 series phones

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Introduction:

Mobile phone OEM giant Foxconn hopes to collaborate with Huawei again, this time with the goal of OEM Huawei's highly anticipated Mate60 series phones. However, with the soaring market demand, Huawei's production capacity is facing serious challenges, which makes the prospects for OEM cooperation not very optimistic. Looking back, Foxconn was Huawei's main partner, but three years ago, due to external sanctions, the two sides decided to go their separate ways. Nowadays, the market landscape has undergone significant changes, and Foxconn once again hopes to gain a place, but whether it can achieve its goal remains to be seen.

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In the mobile phone industry, OEM is a huge and critical business, carrying billions of commercial value behind it. And when Huawei's Mate60 series phones gained attention and sales expectations soared to unprecedented heights, OEM became a hot topic.

Foxconn, a globally renowned electronics manufacturing giant, naturally does not want to miss this business opportunity. Previously, Foxconn was Huawei's main mobile phone OEM factory, and the cooperation between the two was once close and seamless. However, three years ago, the pressure of external sanctions led to a crucial departure, and Foxconn chose to cede power to Huawei, which seemed wise in the circumstances at the time.

However, the market is constantly evolving and the situation is constantly changing. Now, the hot sales of the Mate60 series have made the market hot. Huawei has increased its shipment volume to a staggering 20 million units, and offline store bookings are scheduled for next year. This sales momentum has brought billions of commercial value to Huawei, and the value of OEM orders has also reached tens of billions.

For Foxconn, the opportunity to collaborate again appears very attractive. However, problems also arise. The production capacity of the Mate60 series is far from sufficient, which has become an important bottleneck. Huawei's factories are working overtime to recruit and expand production, but the demand is still not being met. This has brought Foxconn OEM opportunities, but it has also brought huge challenges.

The choice made three years ago forced Foxconn to face a difficult situation. At that time, the company highly relied on Apple orders and was closely linked to Apple's profit fate. However, with the rise of Huawei, Apple's market share in China has gradually been squeezed, and Foxconn's performance has also been affected. In Q1 2023, Foxconn's net profit decreased by 56%, the largest quarterly decline in three years. Q2 did not improve either, with a 30% decrease in operating profit and a 1% decrease in net profit.

In this situation, Foxconn led by Terry Gou urgently needs to find new business opportunities and seek diversified development. In the past two years, he has signaled to Tesla that he hopes to contract manufacturing for Tesla and enter the automotive manufacturing industry. However, Tesla's integrated die-casting technology and highly automated factories pose high technical barriers for new entrants, making it difficult for Foxconn to gain Tesla's trust and orders.

In addition, in the field of chips, Foxconn has also attempted to layout, but earlier withdrew from the chip project in India. Therefore, Foxconn's basic drives still rely on mobile phone OEM.

However, Foxconn's opportunities seem limited. With the rise of Huawei, its OEM orders have gradually decreased, and Apple has also dispersed orders to multiple OEM manufacturers. In the 14th generation of iPhone, the OEM manufacturers are Foxconn and Lexus Precision, but Lexus Precision's share has already reached around 30%. In the 15th generation of the iPhone, orders have changed again, with addition to Foxconn and the addition of Asus OEM. Foxconn's order share has decreased to 58%.

Therefore, Foxconn seems to be sandwiched between Apple and Huawei. On the one hand, Foxconn's share in the Apple market is constantly decreasing, and on the other hand, Huawei's rise has also put competitive pressure on Apple in the Chinese market.

In the next two to three years, as Huawei continues to increase production capacity and achieve breakthroughs in the chip field, it is likely that Huawei will regain its position as the top market share in the Chinese market and compete with Apple. This means that even if Apple transfers OEM orders to Tata Group in India, Huawei may fill this gap.

However, the prospects for Foxconn do not seem optimistic. Mobile phone OEM orders have been double squeezed, and production capacity issues still exist, while Foxconn's diversified development has not yet seen significant results. Guo Taiming needs Huawei, but the OEM order for Huawei Mate60 seems to have no chance with Foxconn, which is undoubtedly a great regret for Foxconn.

For this situation, we can see that the cooperation in OEM is not only influenced by market factors, but also influenced by external politics and sanctions. The relationship between Foxconn and Huawei involves both cooperation and competition. With the continuous changes in the market, the choices and opportunities of both parties are also changing. Foxconn needs to constantly seek new business opportunities and development directions to ensure sustainable growth in the future.

Conclusion:

In the mobile phone OEM industry, the market landscape and competitive situation are constantly changing, and the relationship between Foxconn and Huawei is also affected by these changes. From the termination of cooperation three years ago to the current pursuit of cooperation opportunities, Foxconn's situation is full of challenges and uncertainty.

Firstly, Huawei's rise has had a profound impact on the market landscape. Huawei has become an important player in the global mobile phone market and is fiercely competitive in the high-end market. With the continuous improvement of its product quality and technology, Huawei is expected to regain its top position in the Chinese market share and pose greater competitive pressure on Apple. This is an opportunity for Foxconn, but it is also a challenge as OEM orders will be affected.

Secondly, capacity issues have become a bottleneck faced by Huawei. The hot sales of Mate60 series phones have led to insufficient production capacity, making OEM a possibility. However, the issue of production capacity is only a short-term challenge, and long-term product strategy and development planning are more important for Huawei. Therefore, Huawei needs to carefully consider whether to cooperate again and ensure that the cooperation is beneficial to the company's overall strategy.

Finally, Foxconn needs to continue to seek opportunities for diversified development. Although mobile outsourcing is one of its main businesses, excessive reliance may bring risks. Foxconn has attempted to enter the fields of automotive manufacturing and chips, but faces technological barriers and competition. The company needs to constantly innovate and find new growth channels to cope with the constantly changing market.

Overall, there is still uncertainty about whether the OEM cooperation between Foxconn and Huawei can be achieved. However, this story also reflects the fierce competition and constantly changing market environment in the mobile phone OEM industry. Only by constantly adapting and innovating can we maintain a competitive advantage in this fiercely competitive field.

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