Foxconn Looking to Build $5.7 Billion iPhone Display Factory to Win Apple Orders

[MacRumors]

Apple's main assembly partner for iOS devices, Foxconn, is looking to increase its presence in Apple's supply chain as it considers constructing a new plant to provide displays for the popular devices, according to The Wall Street Journal. Total investment in the project could reach $5.7 billion.

Foxconn, formally known as Hon Hai Precision Industry Co. , is discussing a possible investment with the government of Zhengzhou, about 750 kilometers south of Beijing, according to people familiar with the talks. The two sides are discussing terms such as how to divide the investment, which could reach as much as 35 billion yuan ($5.7 billion), the people said.

The display is typically the most expensive single component in Apple's iOS devices, and the company has long sourced the parts from a variety of vendors including Samsung, LG Display, Sharp, and Japan Display. Foxconn has been seeking to improve its display expertise in recent years, pursuing a troubled partnership with Sharp as it has tried to position itself to win orders for iPhone and iPad displays.

Article Link: Foxconn Looking to Build $5.7 Billion iPhone Display Factory to Win Apple Orders

 

[Michaelgtrusa]

Apple is all about made in the USA.

 

[nostaws]

I hear there is some available factory space in Mesa Arizona.

 

[KdParker]

That labor cost seems low but that is one sweet mark - up for the final price.

It really seems like Apple is poised to go to new heights when it come to market share.

 

[Prof.]

I'm still amazed at the huge profit margins with these phones.

 

[ryansimmons323]

I wonder if they'd be interested in buying some second-hand sapphire furnaces??

 

[tjskywasher]

That labor cost seems low but that is one sweet mark - up for the final price.

Don't forget that there are other costs to take into account, the image just shows cost of materials and labour. It doesn't factor in R&D, distribution, marketing, warranty costs, etc. You may as well double the BOM cost to get a more accurate cost before taking into account the actual profit margin.

 

[jimi78]

I wonder how many iPhones a person can make in a day at $4-4.50 a unit. Seems low, but if they make 700 phones a day...that's ~$3000 a day. now how much of that is employee income?

 

[WaxedJacket]

Apple should build a fully automated display factory stateside

 

[OC40]

I'm still amazed at the huge profit margins with these phones.

The info in this article does not included R&D, advertising, etc. It is a little misleading.

 

[ArtOfWarfare]

I'm still amazed at the huge profit margins with these phones.

Keep in mind that Apple spent $4.5 B in R&D in 2013:
http://appleinsider.com/articles/13...development-costs-ballooned-32-in-2013-to-45b

Since about half of all their money comes from the iPhone, I would assume they spent over $2B on R&D for the iPhone, and with 33.8 M iPhones sold in 2013, that works out to them spending about $60 on R&D per iPhone sold. Also not included is the cost of managing inventory. So the margin is closer to 60%, not 70%, but still, that's a pretty huge margin.

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I wonder how many iPhones a person can make in a day at $4-4.50 a unit. Seems low, but if they make 700 phones a day...that's ~$3000 a day. now how much of that is employee income?

I'm pretty sure multiple employees are involved on each phone, and that 700 is quite high.

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Now my question is this: how much will switching to Foxconn for displays reduce the cost of the display by? Will those savings be passed on to consumers in the form of lessening the cost to the consumer of replacing a broken screen? If the broken screens weren't so expensive to replace, people might care about how easy they are to break a lot less.

 

[frostiex]

just wish apple stop or decrease dealing with China....

 

[furi0usbee]

Maybe Apple could give a loan...

 

[ElectronGuru]

just wish apple stop or decrease dealing with China....

Part of the problem these days is that the U.S. has largely forgotten how to make things. As exemplified by the sapphire debacle, making stuff is hard and we now have overlapping generations with no infrastructure, policies, resources, skills or training. We outsourced all of this and let our capabilities wither and die.

If China closed tomorrow, it would take years to replace those capabilities, even with guaranteed demand. Against China at full capacity, it will take decades of concerted effort to reestablish a healthy, broad manufacturing base. Apple is in the best possible possible position to lead this change and they are struggling against this vacuum of capability.

 

[KdParker]

The info in this article does not included R&D, advertising, etc. It is a little misleading.

In the end it will still be a huge mark up. Hence why Apple has piles of cash.

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just wish apple stop or decrease dealing with China....

Why? Just curious.

 

[DonutHands]

take a look at what apple earned in sales the last quarter, then look at how much of that was profit. That is a much better gauge of how much profit margin there is on the iPhone. Nothing is exact but we do know a large percentage of sales for apple is directly from iPhone.

 

[jamesb5475]

Part of the problem these days is that the U.S. has largely forgotten how to make things. As exemplified by the sapphire debacle, making stuff is hard and we now have overlapping generations with no infrastructure, policies, resources, skills or training. We outsourced all of this and let our capabilities wither and die.

I understand your statement that the US has "largely forgotten" - But disagree with those specific words - We as consumers and manufacturers in the US have less "forgot how to manufacture" and more been taken by the Extreme difference in labor costs between USA and "Far East" - includes China, Malaysia, and the other emerging economies that are even undercutting China and Japan. Much to their chagrin, China/Japan are losing market share as they are enjoying the extra money from what they were making 30 or 40 years ago, and their economies are seeing inflation take effect.
The US still has some manufacturing in the USA, just way more expensive than what the worldwide market can supply. We as consumers need to vote with our pocket books, and give more support to those companies that utilize American products more in their devices, rather than demanding cheaper prices for the products.

 

[lincolntran]

Don't forget that there are other costs to take into account, the image just shows cost of materials and labour. It doesn't factor in R&D, distribution, marketing, warranty costs, etc. You may as well double the BOM cost to get a more accurate cost before taking into account the actual profit margin.

this post deserves to be on the front page as there are so much ignorance.

 

[Edd.Dantes]

No, just no.

Japan or Korean displays, no Chinese!

Even if they license a display technology, it still won't be as nice.

 

[Klae17]

just wish apple stop or decrease dealing with China....

Why? That is a racist remark unless you have some substantial reasoning on why Apple shouldn't be making a load of money. Maybe the US should stop dealing with China too and become a weaker and poorer nation?

 

[SockRolid]

Total investment in the project could reach $5.7 billion.

Foxconn to Apple: "Good news! We negotiated a $5.7 billion deal for LCD production!"

Apple to Foxconn: "Good for you. We're doing OLED screens with Sharp for iPhone 7 and later. <click>"

 

[Michaelgtrusa]

Why? That is a racist remark unless you have some substantial reasoning on why Apple shouldn't be making a load of money. Maybe the US should stop dealing with China too and become a weaker and poorer nation?

? How is that a racist remark? The US became a weaker economy because of outsourcing!

 

[NuclearWasted]

Now we'll get even MORE parts leaks!

 

[ElectronGuru]

Foxconn Looking to Build $5.7 Billion iPhone Display Factory to Win Apple Orders

I understand your statement that the US has "largely forgotten" - But disagree with those specific words - We as consumers and manufacturers in the US have less "forgot how to manufacture" and more been taken by the Extreme difference in labor costs between USA and "Far East" - includes China, Malaysia, and the other emerging economies that are even undercutting China and Japan. Much to their chagrin, China/Japan are losing market share as they are enjoying the extra money from what they were making 30 or 40 years ago, and their economies are seeing inflation take effect.

The US still has some manufacturing in the USA, just way more expensive than what the worldwide market can supply. We as consumers need to vote with our pocket books, and give more support to those companies that utilize American products more in their devices, rather than demanding cheaper prices for the products.

Oh, Im there with you. And I didnt mean to suggest that a price difference between the two markets was not the root cause. But the same price difference also exists between China and Germany and their manufacturing sector is more vibrant than ever. So whatever choices they made are different than whatever choices we made. And in my mind, the difference between them constitutes a choice on our part. So this was not entirely out of our control.

BTW, I believe manufacturing to be fundamental to every economy and that ours is weaker without it. To that end, I work to have most things in my own store, made in the US:

http://www.oveready.com

http://www.oveready.com/usa-manufacturing/info_8.html

I loose business to price advantaged competitors on a regular basis but also make certain those who pay more, get more. I would happily pay an extra $100 for a US made Mac or i device, given the choice.

 

[John Bokma]

I wonder how many iPhones a person can make in a day at $4-4.50 a unit. Seems low, but if they make 700 phones a day...that's ~$3000 a day. now how much of that is employee income?

You really think one can assemble, test, and pack an iPhone in less than a minute?