The longstanding relationship between Apple and Foxconn has worsened recently due to a profit margin battle, according to The Information.
While Apple’s gross profit margin is nearly 40%, Foxconn remains at one digit, leading the company to implement many tricks to increase profits.
According to The Information, for manufacturing projects, Foxconn often tells Apple that it has to hire more workers than it really does. Foxconn also uses Apple devices to make products for its competitors. In addition, they also “go ahead” when checking components and products. As a result, Apple strengthens the supervision and monitoring of Foxconn employees as well as the equipment in its factories.
More than 20 former Foxconn and Apple employees told The Information that the relationship between the two companies is changing, especially as Apple seeks to diversify its supply chain. For example, Apple initially discussed with Foxconn about the production of AirPods Pro. Foxconn said that it would receive contracts and retrofit a facility but ultimately see the contract fall into the hands of someone else.
Foxconn makes 60 to 70 percent of the iPhones it sells each year. By far, Apple is their biggest customer. Therefore, diversifying the supply chain is a big risk. Under Tim Cook’s leadership, Apple seeks to reduce costs and actively test production lines.
In order to make it more profitable, Foxconn tried to sell manufacturing equipment and test individual components with no success. In addition, they also self-manufacture some products such as iPhone screen polishing chemicals instead of relying on Japanese chemicals.
Foxconn has bypassed some Apple policies, using Apple-owned equipment for non-Apple products, allowing Google employees to visit the 12-inch MacBook factory before the product is released. .
Foxconn Also believed to be the burning phase in production. For example, with the iPhone 7, some models are rejected because the screw does not tighten or the excess metal fragments are small, but Foxconn does not remove them, but open them, remove the excess and close it to avoid wasting materials. This process hides from Apple.
Du Lam (According to MacRumors)
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