Strategy in TECH...
The headline caught my attention immediately – “Exclusive: Foxconn reconsidering plans to make LCD panels at Wisconsin plant.” This story, from the highly respected Reuters News Agency, follows a series of articles on Foxconn’s growing business struggles in the wake of a decline in sales to Apple. But it immediately raised a red flag with me…
Hon Hai Precision Industry Co., the Apple, Inc. primary supplier better know as Foxconn, has cut more than 50,000 jobs as the pain from the dramatic drop in iPhone sales is taking its toll on the company. Not only that, but the company has fallen short of hiring goals to which it previously committed to the State of Wisconsin – losing major tax credits for this year.
Worse yet, the outlook for the near future, doesn’t look to improve any time soon.
No doubt about it, Apple Inc. supplier Foxconn has had a really bad week. First, last Tuesday Wisconsin voters kicked Republican Governor Scott Walker out of office, replacing him with Democrat Tony Evers. Then early this week, the company released financial results with disappointing earnings that missed analysts estimates. Both of these unrelated events have combined to cause market analysts to question the company’s strategy going forward.
Sharp Corp., a subsidiary of Taiwan’s Hon Hai Precision Industry Co. which is better known as Foxconn, has said in Japan that it plans to make a major investment in the United States. This announcement precedes by just two days a summit meeting between Japanese and U.S. leaders and is seen as a political move to buy favor with both the Japanese and U.S. governments.
Just days after we told you about Sharp’s decision to stop supplying LCD panels to global TV leader Samsung – a decision that shocked many in Japan – apparently, they’ve done it again. The Nikkei in Japan is reporting that panel pricing negotiations have apparently broken down between Sharp and China’s Hisense Group with the parties unable to agree on a fair price. As a result, Sharp has notified Hisense it will also stop supplying them with panels in 2017.
The media in Japan positively exploded this week with the shocking news that Sharp has notified Samsung it will no longer supply the world’s top seller of LCD TVs with the panels they need for their sets. Samsung was Sharp’s largest customer, but in a shocking power move, after negotiations broke down – Sharp said no deal.
Big changes are coming to Sharp, Corp. in the wake of their acquisition by Hon Hai Precision Industry Co – better known as Foxconn. News out of Japan notes that the deal between Sharp and Foxconn officially closes at the end of this month. According to both parties, the acquisition is proceeding smoothly and is fully expected to close on time.
The ink was barely dry on their $3.5 billion dollar acquisition of troubled Japanese giant Sharp Corp., when Foxconn’s CEO Terry Gou was forced to admit that overall orders for goods produced by the Taiwanese OEM manufacturer are dropping. Gou was essentially pressed to make the admission by China’s Premier Li Keqiang on Tuesday.
Sharp Corp., the embattled Japanese manufacturer best known for LCD flat-panel televisions and soon to be division of Hon Hai Precision Industry Co., (a Taiwanese company better known as Foxconn) is said to be strongly considering cutting another 1,000 jobs at the company as a result of continuing poor performance. This would be the third round of significant employment cuts in the last four years.
The Boards of both Hon Hai Precision Industry Co. (better known as Foxconn) and Sharp Corp. have approved the acquisition of 66% of the outstanding shares of Sharp by the Taiwanese OEM manufacturer of largely Apple, Inc. products. This day came largely as a result of some savvy negotiations and tactics from Foxconn’s CEO Terry Gou, who overcame tremendous odds to score this win.
