As the world's largest iPhone maker, Foxconn is in urgent need of a new business to support future growth. Now, it's eyeing outer space. Last Saturday, two low-Earth orbit prototype satellites manufactured by Foxconn were launched aboard a SpaceX launch vehicle from the Vandenberg Space Force Base in Southern California. For Foxconn, their launches represent a critical moment in the company's ability to diversify into new business areas.
space foundry business
With some established businesses such as smartphones and laptops struggling,This transformation of Foxconn is becoming more urgent.Foxconn hopes to prove through this launch that the company has mastered satellite technology and can meet the growing demand for space communications.
While Elon Musk's SpaceX has built and launched more than 5,000 low-Earth orbit satellites for its Starlink network, Foxconn is betting it can focus on building satellites for corporate and government customers.
Foxconn’s low-Earth orbit prototype satellite
Developed by Foxconn in partnership with National Central University, the satellites are about the size of a backpack, weigh about 9 kilograms each, and are equipped with cameras, communications equipment and other equipment. They orbit the Earth every 96 minutes at a design altitude of 520 kilometers.
Growth engines for the next 15 years
Since succeeding Foxconn founder Terry Gou as chairman in 2019,Liu Yangwei has been looking for ways to diversify the company's business, with a focus on electric vehicles, digital health, robotics, artificial intelligence, semiconductors and communications satellite technologies.
"I need to develop some businesses so that the company can maintain growth in the next 10 or 15 years." Liu Yangwei said in an interview.
Foxconn is the world's third-largest private employer after Walmart and Amazon. According to foreign media forecasts, Foxconn's revenue this year is expected to drop by approximately 6% to NT$6.2 trillion (approximately US$192 billion).
Order Challenge
Currently, Foxconn manufactures about two-thirds of the world's iPhones for Apple. However, satellite orders are not so readily available.
Tim Farrar, president of Telecom, Media and Finance Associates, a California consulting firm, pointed out that Apple needs Foxconn to produce millions of iPhones for it every quarter and frequently update models, but the order time interval of low-Earth orbit satellite customers is usually longer, so the predictability of this business is much lower.
"For an outsourced manufacturer like Foxconn, unless you can find another customer at the right time, you're going to have a very difficult time," Farrar said.
However, he also said,Government orders can provide some protection for Foxconn's satellite business."Foxconn may also be thinking that if the government gives us a basic order volume every year, then it will be no problem." Farrar said. Currently, Taiwan is formulating a plan to launch its first low-Earth orbit communications satellite to replace network connections provided by undersea fiber-optic cables with space-based internet.
Electric vehicles may support Foxconn’s satellite business
Jason Wang, a Foxconn analyst at Taiwan's Yuanfu Securities, pointed out that another pivot of Foxconn's satellite business will be the electric vehicle business because cars require real-time communication technology. "You need to prepare a suitable solution for your car to use. If they want to export this business, they need to at least have an infrastructure to demonstrate this technology in Taiwan," he said.
The bright side is that Foxconn's years of hard work in electronics and the expertise it has gained from making smartphones, game consoles and other devices should help it achieve this goal.
"Taiwan is very good at manufacturing a wide variety of electronic commercial products," said Wang Xiangyu, a researcher at Taiwan's Institute of Astronomy and Astrophysics, Academia Sinica. "These companies can easily pivot to space."