Gou Taiming was caught off guard, Huawei "refused" Foxconn's request, the price of eating and smashing pots!
The reason why Foxconn requested to produce the Mate60 for Huawei
As Huawei's flagship new machine, Mate60 has attracted much attention as soon as it was released, and the market has received enthusiastic response. However, Huawei's own production capacity cannot keep up with market demand, and the situation of short supply is very serious. Consumers can't grab the goods by squatting to buy them, which is undoubtedly a problem for Huawei.
As a well-known foundry, Foxconn has strong production capacity. Gou saw this and felt that this was a golden opportunity - to ask Huawei to hand over the order for Mate60 to Foxconn for production. You know, where in the world is there a free lunch, can accept such a large order from Huawei, the help to Foxconn will be tremendous.
Gou is very confident in his action, because he judges that Huawei urgently needs to increase the production capacity of the Mate 60. Huawei has just launched the new Mate60 series, and the response from all parties is very good, and sales are bound to exceed expectations and continue to be high.
However, its own limited production capacity is far from keeping up with the growth rate of demand, which is undoubtedly a huge opportunity loss for an enterprise. Gou Taiming believes that with Ren Zhengfei's shrewdness, he will definitely not watch this piece of fat fly away, let alone give up his current interests because of past grievances.
Therefore, Gou is confident that this time Huawei will agree to give orders to Foxconn, because Huawei now urgently needs to increase production capacity to meet market needs and earn enough money from consumers. He has even begun to calculate how to arrange Foxconn's production line to fully produce Mate60, which must have many benefits.
Huawei rejected Foxconn's request for two main reasons
When Huawei developed the Mate60, in order to prevent the United States from finding a basis for sanctions, it took highly confidential measures to protect the core technology, and the entire supply chain was strictly closed and unknown to the outside world.
Huawei does not want any unreliable supplier to touch its core technology, because once leaked, it will directly provide the United States with a pretext for sanctions, and the previous achievements will be lost. Therefore, Huawei is extremely cautious when choosing suppliers.
Foxconn, on the other hand, has been more pandering to the United States in the past. In order to curry favor with the United States, Foxconn withdrew a large amount of production capacity in China in the past and took the initiative to stop its foundry services to Huawei at a critical moment, which shows that its position is quite clear.
If Foxconn is allowed into the core supply chain, no one knows whether it will reveal technical details to the United States. Huawei is wary of this.
If Foxconn does leak the core technical details, then Huawei will not only face new sanctions risks, but also lead to the exposure of the entire supply chain. This is a huge blow to Huawei, and it is definitely the end of losing his wife and breaking the army.
So Huawei decided not to take this risk and treated Foxconn's request with caution.
Old and dead do not communicate with each other, this is Foxconn. When the United States sanctioned Huawei in 2019, Foxconn did not receive specific pressure from the United States, but took the initiative to stop its foundry services for Huawei.
This move directly led to the paralysis of Huawei's mobile phone production capacity at that time and suffered heavy losses. Foxconn's "wall grass" behavior has allowed Huawei to see its true face.
There is no doubt that Foxconn's actions at that time caused significant losses to Huawei. At the most difficult moment, partners who have cooperated for many years fled, which directly led to a sharp decline in Huawei's mobile phone production and a loss of a large amount of market share.
If it were not for BYD's timely action and OEM support, the consequences would be unimaginable. Foxconn's betrayal has become a permanent pain in Huawei's heart.
Foxconn used to be Huawei's most important foundry partner, and the two sides have cooperated for many years. Unexpectedly, the critical moment not only did not give support, but made things worse.
This fully shows that Foxconn is not trustworthy. It can treat Huawei like this, and it may also turn its face at any time in the future. Huawei will never tolerate such partners touching their core technologies.
The dilemma Foxconn now faces
This year's performance has plummeted, and the situation is difficult
Since the beginning of this year, Foxconn's life has not been easy. The first quarter earnings report came with bad news, and the net profit fell directly by 56%, which was very tragic. This indicates that the overall performance may fall sharply this year.
The second-quarter earnings report also did not have much comfort, although the decline in net profit has narrowed, but still reached a 30% decline. The first half of the performance fell by nearly half, and Foxconn is now in a very difficult situation.
Investments in regions such as India have not met expectations
Over the years, Foxconn has vigorously transferred production capacity to emerging regions such as India. However, the infrastructure in these areas is not perfect, the education level of local employees is uneven, the overall quality is low, and the production efficiency is difficult to compare with Chinese workers.
Infrastructure in these areas is also very problematic, with occasional interruptions in electricity supply and underdeveloped transport systems, all of which have a negative impact on productivity. Foxconn's investment did not deliver the expected return.
In summary, various immature factors in emerging markets have led to a significant reduction in Foxconn's capacity utilization and efficiency. Investment expectations were dashed, which became an important reason for Foxconn's decline in performance.
Over the years, in order to curry favor with the United States, Foxconn has voluntarily withdrawn about 300 billion yuan of production capacity from China. This has undoubtedly weakened its competitiveness in China.
The Chinese market is the largest in the world, Foxconn does not know how to cherish it, and now it can only suffer in emerging markets, and its survival is already in jeopardy. The massive loss of production capacity in China has become its graveyard.
The idiom "eat and smash pots" can best summarize Foxconn's current situation. It does not know how to cherish its roots in China, and only curries favor with the United States; Now U.S. customers are also reducing orders, but it has no strong backing itself.
This is the retribution of the structure, and Foxconn can only pay a heavy price for what it has done in the past.