Against the backdrop of slow progress in expanding new customers, Foxconn's existing orders are also at risk of being snatched away, and this trend has begun to emerge this season

The significant changes in the mobile phone industry have directly affected the business of Foxconn Precision Industries (hereinafter referred to as "Foxconn"). If no changes are made, it may miss out on more opportunities.

Against the backdrop of slow progress in expanding new customers, there is also a risk of Foxconn's existing orders being snatched away, and this trend has begun to emerge this quarter An analyst in Taiwan, who declined to be named, told reporters that on the one hand, orders from major customers have been diverted, and on the other hand, Foxconn's ability to expand new customers is weak, putting pressure on its peers.

Apple's' cheating 'behavior has dealt a heavy blow to Foxconn

Since Apple became the market leader, Foxconn has benefited greatly from it, but this has also caused a headache for Terry Gou for many years: on the one hand, Foxconn can profit from Apple's success, but on the other hand, it must bear the losses caused by Apple's own performance decline or Apple order transfer.

Foxconn's recently released financial report for the first quarter of 2013 showed a comprehensive revenue of NT $809 billion, a decrease of nearly 20% compared to the same period in 2012. The gross profit margin was 5.68%, a decrease of nearly 1 percentage point compared to the same period in 2012. Worse still, its Taiwanese tablet assembly competitor, Heshuo, saw a 31% increase in revenue, reaching NT $195.27 billion.

Since October last year, the launch of the iPad mini has driven strong revenue growth for Pegasus, with a large number of tablet shipments since the fourth quarter of last year. According to Taiwanese analysts who previously told reporters, Feima's order volume for Apple's new round of products may exceed everyone's expectations.

A KGI Securities analyst who has been tracking Apple for a long time said, 'You can imagine that Apple doesn't like having only one supplier.'. For Pegasus, the most important thing is to prove their ability to produce iPhones or iPads like Foxconn.

Difficulty in expanding new customers

Like other companies in Apple's supply chain, Foxconn is well aware that expanding new customers is a way to reduce risk, but progress does not seem to be smooth at the moment. Foxconn International (02038, a listed company under Foxconn in Hong Kong) has clearly stated that it hopes to expand its customer base in the future by investing in research and development and focusing on new customers. Previously, Foxconn International also set a record for the largest loss in seven years since its listing.

However, a person close to Foxconn told reporters that according to Foxconn's large-scale production method, small phone orders not only result in high production costs, but also lower customer response times than market response times. This is also a core issue that Foxconn needs to consider when expanding new customers.

In March of this year, Terry Gou visited domestic mobile phone manufacturer Xiaomi. On March 21st, Xiaomi President Lin Bin stated on Weibo that Terry Gou visited Xiaomi and held talks with Chairman Lei Jun. The outside world speculates that Foxconn may have obtained orders for Xiaomi phones, but Foxconn refuses to comment on this.

Xiaomi's market share is not high, and it cannot bring considerable revenue to Foxconn. Most of Foxconn's other domestically produced phones are low-end models, and we have not heard of any high-end flagship orders, "the person said.

Orders are not easy to obtain, and Foxconn's competitors are also competing for potential customers. People close to Foxconn also cited the example of BYD (002594, stock bar) (002594). SZ）。

In BYD's recently released first quarter financial report, the net profit attributable to shareholders of the listed company was 112 million yuan, a year-on-year increase of 315.63%. The company stated that the group has successfully developed new projects for smartphones and new products and businesses such as tablets from global mobile phone leaders, which have driven significant revenue and profit growth in the group's mobile phone parts and assembly business. A person familiar with BYD told reporters that the businesses of Samsung and Huawei are important engines for BYD's current electronic business growth.

Last year, Huawei's mobile phone sales saw a significant increase, making it one of Foxconn's most popular OEM customers.

Expanding Samsung's customer base seems like an unrealistic consideration. In the past, Terry Gou has generously expressed his views on Samsung on various occasions, saying, "As long as it does something, I will unite against it. I will definitely give it a blow." At a dinner party, Terry Gou raised his arms and called on well-known Taiwanese IT and home appliance companies to join his "wolf fight" movement, and this wolf is Samsung.