Hon Hai Precision Industry Co (鴻海精密), Taiwan's biggest electronic component maker, has built a big name in the industry by offering quality manufacturing services at much lower prices for global electronics giants.
The company makes computer motherboards for Intel Corp, produces desktop computers for Dell Inc and assembles mobile phones for Nokia Ojy. Without a name on those electronics gadgets, Hon Hai simply sounds foreign to most consumers. But, things are beginning to change.
After being behind the scene for years, Hon Hai decided to come forward to engage consumers by offering electronic parts under the name of Foxconn (富士康).
"Through Foxconn, this year we are trying to provide a brand new experience," Christin Wang (王文玉), global marketing manager, told the Taipei Times in an interview last week during her stay in Taipei for the annual Computex Technology Show which began yesterday.
Wang said Hon Hai now is providing Foxconn electronic components, primarily computer motherboards in the clone market, where tech-savvy consumers go for tailored PCs.
"Foxconn has been in the market for years, but the products are only available for our OEM [original electronic manufacturing] customers. Now we are expanding our business to the average consumer," Wang said.
To promote Foxconn products, Wang's division was formed in March last year in Hon Hai's Chinese headquarters in Shenzhen with a few dozen employees. Now, the division has over staffers 200 around the globe. Despite the ambition to expand into the brand-name business, Wang said Hon Hai does not plan to extend its product line to finished electronic products.
"To avoid directly competing with our customers, you won't see computers or mobile phones with Foxconn's name on them," Wang said.
But this begs the question: Since only a handful of people will take the time to choose a specific motherboard, cooler, or connector for their computers, why bother creating a brand-name for those products, which could only bring a slim profit margin?
"We hope to create the biggest profits from [branded] IT parts, where other firms may view such products as profitless," Wang said.
Number counts. In less than a year after the division began operations, Foxconn has already muscled into the list of top 10 brands in China's motherboards, according to the Beijing-based market researcher Up-Point Consulting Co (友邦顧問).
In the first quarter of this year alone, sales from the division already reached the amount it made last year, according to Hon Hai statistics.
Hon Hai said it aims to increase the division's revenues this year by six times from last year, but it did not provide comparative figures.
In the near term, sales contribution from the division should remain minimal for the company's huge net income of NT$29.76 billion last year, up 18 percent from the previous year, on revenue of NT$541.16 billion.
In terms of shipments, Hon Hai expects to move a total of 40 million motherboards this year.
Hon Hai also hopes to become one of the world's top branded motherboard supplier in the future, taking on the world's top motherboard supplier, Asustek Computer Inc (華碩電腦).
Asustek is expected to make 60 million motherboards this year.
Hon Hai now owns maintenance, logics centers and warehouses in Netherlands, Czechoslovakia, the US and China. The company is expanding its reach to the fast-growing markets in India, the Middle East and Russia, Wang said.
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