Sell Out

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There are two interesting points to this story in today’s Washington Post.

1. Is Foxconn going retail, and if so, what will that mean for the world’s OEMs?

2. The naming of Foxconn as the “world’s largest electronics manufacturer.”

Regarding the first point, it shows great cunning for Foxconn to leverage its position as the builder of just about everything into a completely new market. Heck, with 10,000 stores planned (“make no small plans,” indeed) it could end up going head-to-head with that equally feared and loathed behemoth of the retail space, Wal-Mart.

Keep in mind that while Foxconn is not considered a technology leader, no one has its manufacturing girth. The manufacuturing capacity at most high volume OEMs is a shell of what it once was, and thus companies like Dell, HP, and other major PC makers, and major phone suppliers like Motorola are to large degree at Foxconn’s mercy. There simply isn’t enough of the right capacity elsewhere for them to offload product to, not to mention the logistical and cost nightmares inherent in the attempt. That’s the price of putting so many eggs in one basket.

Regarding the second point, I like how the Post has dispensed with the usual description of Foxconn as the world’s largest EMS/ODM company. Foxconn’s manufacturing build likely exceeds that of IBM and H-P at this point. And that’s what allows the company to move at will.

How long until Foxconn competes with its customers by designing, building and selling its own branded PCs or handsets? And what will the HPs and Dells and Motorolas of the world do then?

Maybe they could get jobs in one of Foxconn’s new stores.

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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow

4 thoughts on “Sell Out”

  1. Agreed…
    my vision of the future ….15 years ago.
    not that it helps .. kinda sad to watch it.

  2. The hollowing out of electronic product OEMs beginning in the mid 1980s was carried out by MBAs whose short sightedness had companies filling their bellies with company “seed corn” to meet short term goals. This type of event seems to have been easily foreseeable but no one in power seemed to have wanted to “rock the trough” when the feeding was so good. Much of that seed corn is gone now (at least in electronics manufacturing) It will be interesting to watch and see how this unfolds going forward.

  3. It’s just one more step on the spiral staircase leading to the basement for Western manufacturers. Joe Fjelstad said it very well. Short-term thinking has led to our long-term demise.

  4. Pingback: at Circuits Assembly blog

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