Foxconn head says company struggling with iPhone 5 demand
updated 09:52 am EST, Wed November 7, 2012
'Not easy' to make the device, Gou comments
Foxconn is being overwhelmed by demand for the iPhone 5, according to the Asian manufacturer's chairman, Terry Gou. Reuters reports that Gou made the comments to reporters following a business forum. "It's not easy to make the iPhones. We are falling short of meeting the huge demand," he said. Production is currently being handled by Foxconn brand Hon Hai Precision Industry; Gou has declined to say whether Foxconn International Holdings might be handling some of the overflow. Normally FIH handles only non-Apple products.
On Monday FIH shares rose by as much as 35 percent following a Citigroup analysis upgrading the company's stock to a buy, and suggesting that it would start building iPhones this year. Apple is already Foxconn's most important individual client; its demands have steadily grown over the years, however, with more complex designs launching in more countries simultaneously. The difficulty of assembling the iPhone 5 has been blamed for keeping sales below levels they might achieve.
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I must admit I am troubled by the production problems Foxconn are having. Clearly, the production slowdown is not only reducing Foxconn's margins, but it is also hurting Apple's sales figures in a critical quarter. Since Apple is quite dependent on one assembly company for almost all of its products, it seems important that they get a second large scale production contract with another company, even if it means trading a little bit of margin.
I wonder how the Brazilian plant is doing. I wonder if the plant in Brazil have enough capacity to export phones to other countries.