The New York Times has a lengthy feature on Foxconn’s efforts to design and manufacture its own hardware products, so that it is not dependant on companies like Apple for its revenues.
The first such venture for the company is the television market, where it is leveraging the $840 million investment Foxconn chairman Terry Gou made in Sharp, to produce flat screen TVs, which it sells in partnership with RadioShack in China and Vizio in the U.S.
Analysts say Foxconn’s strategy satisfies two seemingly contradictory goals. The company does not want to compete with clients directly, because it has TV assembly orders from Sony, Sharp and Toshiba. But it needs to absorb excess LCD panels produced by [Sharp’s] Sakai factory to take advantage of the lower manufacturing cost per unit. Therefore, Foxconn negotiates with partners to sell the television at or below its production cost.
The advantage of already having a facility that churns out a lot of flat screeens would come into play when Apple finally decides to make the long-rumored iTV:
Analysts say Mr. Gou’s efforts to buy an LCD factory and vertically integrate his television manufacturing represent anticipation that orders for an Apple television product will come his way.
“Their gamble now is if Apple will put out a TV, and they should know better than anyone else in the world,” said Mr. Wu, the Credit Suisse analyst. “They’re making a bet that it’ll work.”
All of this shouldn’t come as a surprise — a report in 2012 quoted chairman Gou as saying “Foxconn’s recent 50-50 joint venture factory with Sharp in Japan is one of the preparations made for the [iTV].” Foxconn later, however, backtracked on Gou’s statements.