Foxconn shakes up the world of consumer electronics

Foxconn’s €3bn takeover of SHARP, signed in April, promises to shake up the global consumer electronics market.

Foxconn is already the largest component supplier, systems integrator and subcontract manufacturer for many of the world’s leading brands; most famously Apple’s iPhone. SHARP, on the other hand, is a 100 year old company that has burned through about €9bn in the last four years with a range of consumer products such as solar panels, cash registers, lighting fixtures, and crucially, advanced technology in displays.

It is the display business where Foxconn sees the greatest potential for a turnaround according to a report from Reuters:

Gou (Foxconn CEO) pointed to Sharp's proprietary know-how to mass-produce the advanced IGZO (indium gallium zinc oxide) display technology as a standout, calling it superior to the popular OLED (organic light-emitting diode) technology.

"Everybody is saying OLED," Gou said at the event held at Foxconn and Sharp's jointly owned liquid crystal display factory in Sakai, western Japan.

If I was an engineer, I would choose IGZO, noting that they were more energy-efficient than OLEDs.

— Fowconn CEO

Foxconn’s manufacturing expertise will play an important role in turning around SHARP. Margins are famously tight in subcontract manufacturing at around 3% so there is no room for inefficiency or production line slowdowns.

That is where a Packaging Strategist can help. Many manufacturers do an outstanding job of optimising their production line to move as fast as possible 24 hours a day. But they can fall down at the last stage and packaging their goods can cause the entire production schedule to slow. A DS Smith Packaging Strategist will design packaging, and design packaging machines, that can help the production line run faster, sometimes significantly faster, creating additional production capacity; essentially for free.

Many in the media remain sceptical of whether or not the move will ultimately be profitable for Foxconn but there are very few people willing to bet against boss Terry Gou, who turned at €6700 loan into a manufacturing behemoth employing almost 1,000,000 people.