This chart, put together by Bloomberg, shows the slim profit margins that Foxconn deals with to build millions of pieces of consumer electronics for clients like Apple -- which has seen its margins grow dramatically in recent years.

foxconnmargin
At the time of the iPhone launch in 2007, Apple's profit margins were at 15.4 percent, while Foxconn's was at 2.7. In the most recent quarter, Apple reported 30.8 percent margins -- double what it was 4 years ago -- with Foxconn at a mere 1.5 percent.

Foxconn has continued to grow with the tremendously successful launches of new iPhones and the iPad. The company has sacrificed margin growth so it can get volume and scale, something very important to Apple which puts extraordinary pressure on its suppliers for low prices.

While Foxconn's margins are extremely small in comparison to Apple, they do exceed those of a number of categories, including grocery stores and the global shipping industry.

Top Rated Comments

SandynJosh Avatar
128 months ago
While Foxconn's margins are thin, at least they are making money. That's something that many in the electronics industry can't say.

What is amazing, and everyone on this thread hasn't mentioned, is that Apple has been able to make extremely healthy profits on a large scale. Usually these kinds of profits are only possible in a tiny niche industry that is too small to attract wolves ready to make the same products for much smaller profits.

Apple protects their turf using a lot of tools, the patent suits being only one such. Rather then blast Apple for making healthy profits, one should laude them for doing what most other companies cannot figure out how to do: be innovative with their products, be innovative in setting up cost efficient production strategies, be innovative in marketing to their customers, and being innovative in hundreds (if not thousands) of unique ways.

Remember, Apple shouldn't have been successful with their stores, everyone predicted a huge failure. Remember how Steve Ballmer laughed at the idea Apple could be effective in the phone business. Remember how everyone's tablet up to the iPad flopped terribly. Apple is seeking to break ground in many areas where other's make very thin profits, including the TV industry.

It's almost like there's been a business tenet in place that if you are going to do large scale things in certain business sectors then you will only make razor thin profits. Apple is proving that idea wrong, and in doing so, may actually shock the business industry into rethinking some basic business tenets so that once again companies may start making money like it was the 50s or 60s again.

One more thing: do a search for an article in the New York Times titled Even a Giant Can Learn to Run.

It's about the turn-around at I.B.M. with the new C.E.O., Samuel J. Palmisano, in 2002. That's when the company shed the P.C. business along with other businesses that were not highly profitable. It's been so profitable that Warren E. Buffett, who typically shuns technology stocks, announced he had accumulated $10 billion of I.B.M. shares, a stake of more than 5 percent.

What I found most interesting about Mr. Palmisano is that he built the change at I.B.M. on four questions:
• “Why would someone spend their money with you — so what is unique about you?”
• “Why would somebody work for you?”
• “Why would society allow you to operate in their defined geography — their country?”
• “And why would somebody invest their money with you?”

It sounds obvious, but that's how change starts. Some companies break mental boundaries, and other can follow. There was a time no olympian could break the four-minute mile, however once one man did, it is now being done at high school meets.
Score: 9 Votes (Like | Disagree)
firewood Avatar
128 months ago
Foxconn should give apple a taste of the apple tax.
This "tax" is based purely on supply and demand. Nobody just "gives" tastes.

Apple can keep their prices and thus their profits high because a huge portion of their customer base has zero interest in buying a Dell or a Nokia thingy, even if it's 10%+ cheaper than Apple's stuff. The demand still strongly exists even at the higher price point.

However if Foxconn tried raising their prices more than just a bit, a whole bunch of other manufacturing companies would gladly jump in with a price in between, and many of Foxconn's customers would jump ship faster than a blur. The taste would be of a poisoned fruit Foxconn would end up eating themselves.
Score: 5 Votes (Like | Disagree)
Cybbe Avatar
128 months ago
It's highly entertaining to see the fanboy brigade out in numbers, praising Apple as this god-like entity with a right to earn super-profits, asserting its suppliers should join in on the religious praise and be glad they are in business at all.
Score: 4 Votes (Like | Disagree)
samcraig Avatar
128 months ago


The reality of any business relationship is that one party will almost always end up needing the deal more, or needing the other more. If Foxconn feels "exploited" then they can renegotiate with Apple. For now, they have an agreement in place. If Foxconn's workers feel exploited, then it's a matter that is between them and Foxconn, not Apple.

I don't disagree per se. However - they might not actually be able to renegotiate or their hands might have been tied in the first place IF they wanted to sustain their business.

Further - it DOES say something about Apple if (and I say IF) Foxconn workers are exploited. It's not JUST a matter between the employees and Foxconn.

You can't deny that the press just loves to run with stories when someone at Foxconn gets injured, commits suicide, etc. And whether or not it's "fair" to Apple is irrelevant. They get the bad press.
Score: 4 Votes (Like | Disagree)
cvaldes Avatar
128 months ago
Guess who convinced Steve to get Apple to dump its factories and outsource manufacturing?

Tim Cook.
Score: 4 Votes (Like | Disagree)
JHankwitz Avatar
128 months ago
Isn't it time Apple started to bring manufacturing home?

They certainly would do bring manufacturing to the States if you would be willing to pay the price. You, the consumer decide what products sell.

I work with a company that purchases components from China. They get quotes from USA companies on a regular basis. China companies bid at 10-15% of what the USA companies bid. Using the US components would cause the final product sale price to jump by 400%. Would you buy an iPad if Apple charged 4 times its current price? I don't think so. They'd be out of business in no time.
Score: 3 Votes (Like | Disagree)

Related Stories

studio buds family

Beats Studio Buds Debuting Today With Active Noise Cancellation, Stemless Design, and More for $150

Monday June 14, 2021 8:00 am PDT by
We've seen a lot of teasers about the Beats Studio Buds over the past month since they first showed up in Apple's beta software updates, and today they're finally official. The Beats Studio Buds are available to order today in red, white, and black ahead of a June 24 ship date, and they're priced at $149.99. The Studio Buds are the first Beats-branded earbuds to truly compete with AirPods...
YouTube Picture in Picture Feature

YouTube Premium Subscribers Can Now Use iOS Picture-in-Picture: Here's How

Wednesday August 25, 2021 3:55 am PDT by
Google has rolled out picture-in-picture support as an "experimental" feature for YouTube premium subscribers, allowing them to watch video in a small window when the app is closed. If you're a premium YouTube subscriber looking to try out picture-in-picture, follow these steps: Launch a web browser and sign into your YouTube account at YouTube.com. Navigate to www.youtube.com/new. Scroll...
gradiente iphone white

Brazilian Electronics Company Revives Long-Running iPhone Trademark Dispute

Tuesday May 19, 2020 1:06 pm PDT by
Apple has been involved in a long-running iPhone trademark dispute in Brazil, which was revived today by IGB Electronica, a Brazilian consumer electronics company that originally registered the "iPhone" name in 2000. IGB Electronica fought a multi-year battle with Apple in an attempt to get exclusive rights to the "iPhone" trademark, but ultimately lost, and now the case has been brought to...
youtube apple tv

YouTube Discontinuing 3rd-Generation Apple TV App, AirPlay Still Available

Wednesday February 3, 2021 3:09 pm PST by
YouTube is planning to stop supporting its YouTube app on the third-generation Apple TV models, where YouTube has long been available as a channel option. A 9to5Mac reader received a message about the upcoming app discontinuation, which is set to take place in March.Starting early March, the YouTube app will no longer be available on Apple TV (3rd generation). You can still watch YouTube on...
ryanscoolios13thumbnail

Apple Releases iOS 13.1.3 With Bug Fixes for Phone, Mail, Health, and More

Tuesday October 15, 2019 10:09 am PDT by
Apple today released iOS 13.1.3 and iPadOS 13.1.3, minor updates to the iOS 13.1.2 software that was released two weeks ago. This is the fourth update to the iOS 13 operating system that came out in September. The iOS and iPadOS 13.1.3 updates are available on all eligible devices over-the-air in the Settings app. To access the updates, go to Settings > General > Software Update....
bluetti eb70 main

MacRumors Giveaway: Win a Bluetti EB70 Portable Power Station and 200W Solar Panel

Friday September 3, 2021 11:13 am PDT by
For this week's giveaway, we've teamed up with MAXOAK to offer MacRumors readers a chance to win a Bluetti portable power station and an accompanying solar panel. Bluetti makes a range of portable power station options that are useful for camping, emergencies, power outages, off-grid living, and similar situations. The Bluetti EB70 is a solid middle of the road option that offers 716Wh and...
M1X MBP Feature

Leaker: Upcoming MacBook Pro to See Price Hike Over Current Model, Equal Performance Across 14 and 16-Inch Sizes

Tuesday August 24, 2021 5:28 am PDT by
The upcoming 14-inch MacBook Pro is set to be more expensive than the current 13-inch MacBook Pro and both the 14 and 16-inch models will offer the same performance, according to the leaker known as "Dylandkt." The leaker shared the information on Twitter, explaining that both of the upcoming MacBook Pro models, expected to come in 14 and 16-inch sizes, will feature the same performance due...
iphone 13 teal with text

Apple Expecting iPhone and iPad Supply Constraints in September Quarter

Tuesday July 27, 2021 2:34 pm PDT by
During today's earnings call covering the third fiscal quarter of 2021 (second calendar quarter), Apple CFO Luca Maesteri said that Apple is expecting supply constraints to affect the iPhone and the iPad in the coming quarter. "The supply constraints that we've seen in the June quarter will be higher in the September quarter," said Maestri. The constraints will impact iPhone and iPad sales...
os x mountain lion macs 16x9 2

Apple Makes OS X Lion and Mountain Lion Free to Download

Wednesday June 30, 2021 12:19 pm PDT by
Apple recently dropped the $19.99 fee for OS X Lion and Mountain Lion, making the older Mac updates free to download, reports Macworld. Apple has kept OS X 10.7 Lion and OS X 10.8 Mountain Lion available for customers who have machines limited to the older software, but until recently, Apple was charging $19.99 to get download codes for the updates. As of last week, these updates no...
maxresdefault

Craig Federighi and Greg Joswiak Discuss iPadOS 15, macOS Monterey, Privacy, Shortcuts on Mac, and More

Saturday June 12, 2021 6:12 am PDT by
As is tradition, Apple executives Craig Federighi and Greg Joswiak joined Daring Fireball's John Gruber in an episode of The Talk Show to discuss several announcements that Apple made over this weeks WWDC, including iPadOS 15, macOS Monterey, and a large focus around privacy. Federighi kicks off the conversation discussing the common architecture, now thanks to Apple silicon, across all of...