Profit Margin Tensions Souring Relationship Between Apple and Foxconn

The relationship between longtime partners Apple and Foxconn is eroding due to a battle over profit margins, according to a new report from The Information. While Apple's gross profit margins are close to 40 percent, Foxconn's profit margins are in the single-digit percentage points, leading Foxconn to employ questionable tactics in an effort to grow its profits.

foxconniphone12
For manufacturing projects, Foxconn routinely tells Apple that it hired more workers than it actually did. Foxconn has also used Apple-owned equipment when making devices for Apple's rivals, and has taken shortcuts on component and product testing. As a result, Apple has increased monitoring and tracking of Foxconn employees and its equipment that's in Foxconn facilities.

More than two dozen former Foxconn and Apple employees told The Information that the relationship between the companies is changing as Apple seeks to diversify its supply chain. Apple originally spoke to Foxconn about manufacturing the AirPods Pro, for example, with Foxconn expecting to win the contract and retrofitting a facility for production purposes only to see the contract go to Foxconn's competitors.

Foxconn manufactures between 60 and 70 percent of the iPhones sold each year, and Apple is by far Foxconn's largest customer, so supply chain diversification is a major threat. Under Tim Cook, Apple has sought cost reductions and implemented aggressive audits of manufacturing lines.

To generate more profit, Foxconn has tried selling its own equipment for manufacturing and component testing with limited success, as well as moving some manufacturing products in-house. Foxconn developed its own chemicals for polishing the iPhone's screen rather than relying on chemicals from a Japanese company, for example.

Foxconn has disregarded some of Apple's policies, using Apple equipment for non-Apple products as mentioned above and providing Google employees with a tour of a Foxconn factory manufacturing the 12-inch MacBook ahead of its release. Foxconn also reportedly cuts corners with manufacturing. With the ‌iPhone‌ 7, some reject phones had loose screws or tiny bits of metal that were supposed to be disassembled, but Foxconn instead opened the flawed phones, removed debris, and resealed them to avoid wasting materials, a process hidden from Apple.

More detail on the souring relationship between Foxconn and Apple and additional examples of tension between the two companies can be found in The Information's full report, which is well worth reading.

Popular Stories

iPhone 17 Pro in Hand Feature Lowgo

iPhone 17 Pro Coming Soon With These 14 New Features

Friday July 4, 2025 1:05 pm PDT by
Apple's next-generation iPhone 17 Pro and iPhone 17 Pro Max are just over two months away, and there are plenty of rumors about the devices. Below, we recap key changes rumored for the iPhone 17 Pro models. Latest Rumors These rumors surfaced in June and July:Apple logo repositioned: Apple's logo may have a lower position on the back of the iPhone 17 Pro models, compared to previous...
iphone 16 pro models 1

Here's How the iPhone 17 Pro Max Will Compare to the iPhone 17 Pro

Saturday July 5, 2025 1:00 pm PDT by
Apple should unveil the iPhone 17 series in September, and there might be one bigger difference between the Pro and Pro Max models this year. As always, the Pro Max model will be larger than the Pro model:iPhone 17 Pro: 6.3-inch display iPhone 17 Pro Max: 6.9-inch displayGiven the Pro Max is physically larger than the Pro, it has more internal space, allowing for a larger battery and...
iPhone Car Key Kia

Here's Which Vehicles Offer iPhone Car Keys

Sunday July 6, 2025 3:03 pm PDT by
In 2020, Apple added a digital car key feature to its Wallet app, allowing users to lock, unlock, and start a compatible vehicle with an iPhone or Apple Watch. The feature is currently offered by select automakers, including Audi, BMW, Hyundai, Kia, Genesis, Mercedes-Benz, Volvo, and a handful of others, and it is set to expand further. Apple has a web page with a list of vehicle models that ...
imac video apple feature

Apple Launching These 15+ Products Later This Year

Sunday July 6, 2025 8:05 am PDT by
The calendar has turned to July, meaning that 2025 is now more than half over. And while the summer months are often quiet for Apple, the company still has more than a dozen products coming later this year, according to rumors. Below, we have outlined at least 15 new Apple products that are expected to launch later this year, along with key rumored features for each. iPhone 17 Series iPho...
iOS 26 Feature

Everything New in iOS 26 Beta 3

Monday July 7, 2025 1:20 pm PDT by
Apple is continuing to refine and update iOS 26, and beta three features smaller changes than we saw in beta 2, plus further tweaks to the Liquid Glass design. Apple is gearing up for the next phase of beta testing, and the company has promised that a public beta is set to come out in July. Transparency In some apps like Apple Music, Podcasts, and the App Store, Apple has toned down the...
iPhone 17 Pro in Hand Feature Lowgo

iPhone 17 Pro to Reverse iPhone X Design Decision

Monday July 7, 2025 9:46 am PDT by
Since the iPhone X in 2017, all of Apple's highest-end iPhone models have featured either stainless steel or titanium frames, but it has now been rumored that this design decision will be coming to an end with the iPhone 17 Pro models later this year. In a post on Chinese social media platform Weibo today, the account Instant Digital said that the iPhone 17 Pro models will have an aluminum...
iphone 17 pro render majin bu

New iPhone 17 Pro Renders Highlight Apple Logo and MagSafe Design Changes

Sunday July 6, 2025 8:43 pm PDT by
New renders today provide the best look yet relocated Apple logo and redesigned MagSafe magnet array of the iPhone 17 Pro and iPhone 17 Pro Max. Image via Majin Bu. Several of the design changes coming to the iPhone 17 Pro model have been rumored for some time, such as the elongated camera bump that spans the full width of the device, with the LiDAR Scanner and flash moving to the right side. ...
Prime Day 25 Feature Warm Triad

The Best Early Prime Day Deals on Apple Products

Saturday July 5, 2025 7:22 am PDT by
Amazon is soon to be back with its annual summertime Prime Day event, lasting for four days from July 8-11, the longest Prime Day yet. As it does every year, Prime Day offers shoppers a huge selection of deals across Amazon's storefront, and there are already many deals you can get on sale ahead of the event. Note: MacRumors is an affiliate partner with Amazon. When you click a link and make a ...
airpods pro 2

AirPods Pro 3 to Help Maintain Apple's Place in Earbud Market Amid Increasing Low-Cost Competition

Thursday July 3, 2025 7:25 am PDT by
Apple's position as the dominant force in the global true wireless stereo (TWS) earbud market is expected to continue through 2025, according to Counterpoint Research. The forecast outlines a 3% year-over-year increase in global TWS unit shipments for 2025, signaling a transition from rapid growth to a more mature phase for the category. While Apple is set to remain the leading brand by...

Top Rated Comments

chachawpi Avatar
61 months ago
Maybe Apple should use its size and power for good and take a cut in their own profit margins for the purpose of bringing the manufacturing home.
Score: 46 Votes (Like | Disagree)
rjp1 Avatar
61 months ago
Apple’s greed ... every where ... will probably be what will bring about their downfall.
Score: 28 Votes (Like | Disagree)
nwcs Avatar
61 months ago
I’m surprised it took this long for this to occur. This may be the reason why Apple has been diversifying its manufacturing rather than political issues or humanitarian ones.
Score: 18 Votes (Like | Disagree)
robjulo Avatar
61 months ago
Of course...greed that would be excoriated on this site if it were any other company other than Apple, will be cheered by the usual suspects here.
Score: 16 Votes (Like | Disagree)
JetBlack7 Avatar
61 months ago

Maybe Apple should use its size and power for good and take a cut in their own profit margins for the purpose of bringing the manufacturing home.
If they wanted that, they would be manufacturing in the US a long time ago. They just prefer to get a much larger profit margin with much cheaper labor.
Score: 13 Votes (Like | Disagree)
chachawpi Avatar
61 months ago

We need to include *all* the tech giants in this, not just Apple. And we also should not forget the telecomms.

Jacques Attali was right. Corporations and their CEOS are becoming the new feudal overlords.
A company with Apple's size, power, and influence should feel obligated to move the goalposts and set an example for others.
Score: 11 Votes (Like | Disagree)