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Monday, May 27, 2013, 05:51 am PT (08:51 am ET)

Foxconn may sell own branded accessories after Apple profits dip

With most of its profits believed to come from manufacturing Apple products, Foxconn plans to diversify its business, and is even planning to build, brand and directly sell its own electronics accessories compatible with devices like the iPhone and iPad.

Details about Foxconn's internal plans were shared with The Wall Street Journal by an unnamed executive at the company, which is also known as Hon Hai Precision Industry Co. According to a report published Monday, Foxconn is "aggressively" moving to add new clients and expand its business to reduce reliance on Apple.

Tim Cook at Foxconn

Apple CEO Tim Cook touring an iPhone production line at a Foxconn plant in Zhengzhou, China.


Last quarter, Foxconn saw its revenue fall 19 percent in the first quarter of 2013, though net profit was up 2.9 percent. The revenue reduction coincided with Apple's first year over year profit decline in a decade.

Market watchers suspect that Apple is responsible for about 50 percent of Foxconn's revenue, though the company doesn't offer such numbers in detail.

But according to the unnamed executive, Foxconn plans to be able to supply all of the components for devices it assembles. Currently, customers like Apple must buy their components from multiple vendors, and provide them to Foxconn to have the final product assembled.

Beyond its ambitious manufacturing plans, Foxconn is also reportedly interested in selling its own branded accessories, including cables, headphones and keyboards that would be compatible with Apple products such as the iPhone and iPad.

Foxconn may even sell its own electronics and those of its partners directly, Monday's report said. The company is said to be investigating online retail operations, because those sales could generate higher margins than its current manufacturing efforts.

Foxconn's efforts to lessen its reliance on Apple's iPhone for its profits were first detailed earlier this month by The New York Times, though Monday's latest report offers more specifics on what those plans may entail. The company has also shown increased interest in televisions, and bought a significant stake in LCD maker Sharp as part of those plans.

Apple's declining profits come as the company has yet to release any major products thus far in 2013. CEO Tim Cook signaled in April that major new products will be arriving this fall and throughout 2014.

In the interim, Apple is expected to introduce new MacBook models at its annual Worldwide Developers Conference in June. In particular, MacBook Air inventory has been drying up ahead of the company's planned June 10 keynote. But the Mac has become an increasingly small part of Apple's business, as the high-margin iPhone and iPad have come to represent the lion's share of the company's revenue.