A research institute recently stated that Hon Hai was affected by the incident at the Zhengzhou factory. In addition to the decline in shipments of the iPhone 14 series, it also lost its exclusive supply of the iPhone 15 Pro Max. Luxshare Precision has thus become one of the ranks of the iPhone 15 Pro Max assembly supply chain.
This survey result also sparked speculation in the market, whether under the help of Apple, Red Chain has caught up and is enough to shake Hon Hai’s long-established leading position in the iPhone OEM?
In this regard, market sources revealed that, in fact, following the Zhengzhou incident, whether Hon Hai still has the exclusive supply status of high-end iPhone is no longer the key point. Because Apple wants to decentralize the supply chain is well known and has become a fact. Unlike in the past, under the influence of factors such as geopolitical tensions and the pandemic, Apple now pays more attention to the “global layout capabilities” of the supply chain and “Production Line Elasticity”.
Supply chain management is a long-standing strength
And this is also the advantage that Hon Hai has accumulated for a long time. Liu Yangwei once expressed his views on the Zhengzhou incident at the third-quarter law conference, pointing out that the Zhengzhou incident was a factor of the epidemic, not a production technology problem, and the epidemic may be affected in the short term. Moreover, Hon Hai and its customers also learned how to diversify risks in this incident. Hon Hai will have new practices in the future and will do better. If similar incidents happen to competitors, there will be a limit to what they can do; therefore, for Hon Hai, the short-term impact will not be great, and there is little chance for competitors to take advantage of this to profit.
Liu Yangwei further emphasized that in addition to the competitive advantage of scale, Hon Hai is also strong in supply chain management capabilities and manufacturing that requires large-scale manpower. It is actually not easy for competitors to have the above capabilities. And following the Zhengzhou incident, the relationship between Hon Hai and customers will be even better, because this time it shows Hon Hai’s ability to deal with crises and can reflect the value of cooperation between the two parties in the long run.
Therefore, it is conceivable that the so-called exclusive supply, as Apple decides to decentralize the supply chain, is not so important to Hon Hai; because what Apple needs next is not only pure production technology, but suppliers must also have a global presence and production line flexibility.
India is Hon Hai’s next battlefield and its advantage
In addition, market participants further pointed out that another advantage of Hon Hai lies in actively expanding the Indian market; in the future, the market share of the iPhone will no longer be limited to China, but the China + India market. The reason why the old gods are here.
For example, Liu Yangwei led a team to visit India in August this year, and met with Indian Prime Minister Narendra Modi, and the two sides discussed in detail the plan for making in India. Modi then posted on Twitter, welcoming Hon Hai’s expansion of electronics manufacturing capacity in India, including the semiconductor industry, and emphasizing that electric vehicle manufacturing is in line with India’s commitment to net zero emissions.
At the same time, Liu Yangwei also called on Rama Rao, Minister of Industry of Telangana Province in southern India, to discuss Foxconn’s plan to expand its business in India. The two sides discussed issues in the fields of electric vehicles, digital health, electronics and robotics Discuss and invite Hon Hai to invest and set up a factory in Telangana Province.
In short, judging from recent media reports and Hon Hai’s announcements, Hon Hai is accelerating its deployment in the Indian market. Although the outside world sees that India has factors such as poor infrastructure, poorer quality of personnel than China, and low government efficiency, market participants emphasize that it is not an easy task to overcome the above challenges as the Indian government, Apple and Hon Hai all agree to invest in development. Difficult, and I believe it will not take too long.
According to market participants, with Hon Hai’s active investment, if Apple manufactures a full range of products in India in the future, Hon Hai will be the top choice. And this advantage is beyond the reach of Luxshare at present. First, Luxshare has not yet proved its global layout capabilities. Second, under the tense Sino-Indian relationship, it is quite difficult for Luxshare to enter the Indian market.
In short, given the fact that Apple’s decentralized supply chain has become a reality, the future iPhone manufacturing landscape is bound to change. For Hon Hai, the current strategy is to maintain its industry advantages and continue to innovate; keep an eye on changes in industries and technologies, and combine wisdom and flexibility In order to maintain the leading position of the iPhone OEM, it actively builds a flexible value chain, rather than focusing on whether there is an exclusive supply.
(Source of the first picture: Hon Hai)
