Foxconn restructuring: Change seems to be the most urgent

The technology does not lead Hon Hai out of the gloom of its share price, and Mr. Gou, chairman of Foxconn, the world's first-generation factory, knows it.

At the Hon Hai Shareholders ' meeting on 26th, Mr Gou apologized to his shareholders with a deep bow, even though he said "the price is a big environmental factor and I can't control it", but he still can't help but lament the "baffled". Hon Hai has plunged 64.39% since the financial crisis began on New Year's Day in 2008. In the year ending May, Hon Hai's revenues fell 12.6% per cent year-on-year, before Hon Hai's goal this year was to increase revenue by 15% Year-on-year.

Change seems to be the most urgent

At its eight-hour shareholder meeting the previous days, Hon Hai announced a break-up of its business restructuring resolution and plans to reduce its reliance on Apple's product manufacturing, focusing on the development of new technologies, intellectual property and E-commerce. Mr Gou said Hon Hai plans to split the entire enterprise into independent subsidiaries in three years, hoping to achieve revenue growth.

Compared with the communication terminals in recent years have been highly valued, the corresponding manufacturing is still lonely, long and difficult to get applause of the industry. "In Taiwan's electronic times, the convenor of the Wang Junyi, the real transformation of the manufacturing industry and value-added to respond to the rapidly changing industry is an urgent problem, 2013 for Yu Honghai more important is to hold the results."

Start of the first wave of structural adjustment in July

A few months ago, Taiwan media reported that Mr. Gou planned to retreat for two months only to reflect on the company's future transformation, in which "fleet splitting, the size of all, the last one" will be the three main axes of transformation.

At the shareholders ' meeting, Hon Hai unveiled its plan to split up first, experimenting with two or three business groups in the preliminary stage, Hon Hai or the main controlling shareholder in the pilot phase, and structural adjustment will not dilute shareholder rights. Mr Gou said the adjustment would not have any impact on the group's profits, and that through the company's independent operation, he would be more focused on other business development, essentially restructuring is the hope that the group from the "aircraft carrier" into an "air Combat group", the United Sea-land and air operations.

According to understand, the first wave of reorganization is Hon Hai's "network-connected Products business Group" nwing, as well as carbon nanotubes technology, plastic technology applications, including the July launch of the nwing most of the outside world attention.

According to the report of Hon Hai Group Vice President Lu Songzing, nwing after independence, the name will be changed to fit (Foxconn Interconnect Marvell), will still be engaged in connector related product research and development design and production, including high-frequency high-speed and optical transmission connectors and wire. "Connector products can be used in clouds, high-speed networks, wireless communications, automotive electronics and other fields, and wearable electronic products are used in connector products," Mr. Gou said. "Hon Hai Connector is a world-class product, connector business group is currently ranked first in the mainland, confident in 3 years can do the world's first." "said Mr. Gou.

At present, nwing annual revenue of about 80 billion yuan (NT), accounting for about 2% of the total revenue of Hong Hai, after the business restructuring will have the opportunity to break through hundreds of billions of NT checkpoints.

Taiwan supply chain analysts to the reporter said that the previous Yushonghai Shong main supply of Apple's iphone external line, since the end of last year has been dispersed to the Japanese factory, the United States and the mainland of the company's sophisticated, connecting lines and connectors to the loss of serious orders. After the break-up of the business can not only "with small broad" to obtain more orders, can also be "without burden" posture to regain the order of Apple.

"Connected product business group has a number of patents, the future can also be independent of the external customers to collect royalties." "The analysts said.

and the separation of technology applications, as the main responsible side, Tianjin Fu na source Chong is the world's first carbon nanotubes to commercialize and make money of the enterprise. Carbon nanotube technology includes all touch-screen products, from children's education flat-panel GPS, industrial computers, e-books to mobile phones, which Mr Gou thought was the only part that could be spun out of the 5~10 in the future, with more than 2000 patents currently in place. and plastic material technology can replace screws, improve product production yield.

In the industry's view, a spin-off could help Hon Hai raise its sales by 20% in the first year. Mr Gou also hopes that in the future, the gold-plated golden Rooster will be able to outperform Hon Hai after leaving the Hon Hai.

At present, Hon Hai's more than 20 business units can be dispersed into separate subsidiaries.

The transition of foundry industry is imminent

Digitimes Internal report said that as early as a few years ago, Mr Gou has said he will move Mr Hung Haifuskand to the holding company in the form of a spin-off, and put forward the concept of the fleet in the 2011 shareholder meeting, stressing that the "flying, floating, underground drills" of the group will be put on the table respectively. , in addition to the display of their own value, can further achieve a high degree of industrial integration.

But Apple's good business has not speeded up the big shift.

Wang Junyi, who attended the 2011 and 2012 shareholder meetings, said at the 2011 Hon Hai Shareholders ' meeting, Mr Gou was just as proud to have completed the difficult retreat practice and the internal force of the martial arts 10%, saying that the words were so hard to develop and that Hon Hai could finish the difficult task. At the same time also relish its existing supply chain operations and cost control capacity. And in 2012, while some practitioners realised that no matter how fine the manufacturing was, it would be difficult to change the low profit margin, but Hon Hai still relies on a "factory, technology, trade transition" plan, The success of the year, the combined revenue and net profits of Hong Hai to the NT $3.91 trillion and 94.762 billion yuan in the history of the new record.

"But this year, Hon Hai seems to be less enthusiastic about the industry and more dissatisfied with policy and share prices." Wang Junyi told the newspaper reporter.

Some industry insiders to the reporter analysis, although Hon Hai has accelerated the pace of restructuring, but it can be seen in the world's largest manufacturers of electronic products contracts, Apple orders last year to bring the revenue accounted for more than 60%. In addition, the hardware transformation and access to the construction of Hon Hai is still a need to explore the way, short-term can not get immediate effect began to let Hon Hai worried.

It can be seen, whether it is with the music or the cooperation of millet, Hon Hai has begun to change the past only with the first line of international companies to cooperate with the practice, recently, Hon Hai also rare in Taiwan held a press conference announced with Mozilla Alliance, put Firefox (Firefox) open platform related product development.

In addition, Hon Hai is also strengthening the penetration of terminal channels and products. Digitimes analysts said Foxconn had previously relied on its subsidiary, Guangyu, to work with Foxconn and the German Metro Group (Metro) to invest tens of billions of dollars in the mainland, creating more than 10,000 3C and home appliance outlet chains.

But take the mainland channel as an example, in the reporter's interview found that steam shops and flying Tiger Tesco has been in almost "premature" situation. Although many digital brands have a deep working relationship with Foxconn, Foxconn does not have access to any preferential channel authority outside the foundry. As a result, Foxconn can only compete with other distributors or retailers for suppliers.

Hon Hai spokesman told reporters that Hon Hai will continue to increase investment in hardware this year. Mr Gou said the group's combined revenue after the restructuring this year still had a growth target of 15%, the same target of 4.5 trillion NT this year.