How far is Gou's control over the industry chain to get rid of Apple's dependence?

On March 28, Taiwan’s Hon Hai announced that it will spend 809 million U.S. dollars with three subsidiaries to acquire Sharp’s largest shareholder. It is reported that this is only the first step for Hon Hai to enter Sharp. Hon Hai also plans to acquire approximately 46.5% of Sharp's LCD panel plant in Sakai, western Japan. After the completion of this merger, Hon Hai Group will exceed Japan Life Insurance Company and become the largest shareholder of Sharp Corporation. For the reason of this transaction, Sharp said that the reason for introducing Hon Hai is because Sharp Corporation set a deficit amount in 2011. Sharp's 100 years of record. “We need new capital to improve our business base, and we also need new partners to help us improve the market, and Hon Hai is the best partner we expect.”

The industry generally believes that Terry Gou had shot at Sharp when he was caught in a huge loss, and he had the meaning of taking advantage of the opportunity. The Sharp's final forecast report showed that in the fiscal year ending in March of this year, the company will have 290 billion yen (approximately 22.3 billion yen). Yuan renminbi's huge deficit. Sharp's stock fell sharply last week, innovating a new low for 30 years. Li Yi, executive vice chairman and secretary-general of the China Mobile Internet Industry Alliance, said on Weibo: “Comrade Gou has once again made a huge deal.”

However, Sharp emphasized that the Hon Hai Group and its three companies hold Sharp shares, respectively, which totals nearly 10%. Therefore, the largest single shareholder is Japan Life Insurance, and the decision-making power will not change. Appliance analyst Liang Zhenpeng said that even if Hon Hai’s single shareholder holds 10% of its shares, it cannot control Sharp. In a listed company, the unit price does not exceed 20%-30%, and it is difficult to control one company in essence.

"There is no suspense, the future iMac, iBook, iPhone, iPad and the legendary iTV (Apple TV) will certainly tilt to Sharp in the purchase of LCD screen. What is the "vertical integration"? Guo Shi gave the big guy a lesson Open class.” Li Yi gave such an assessment of the industrial impact of Gou’s acquisition. Chen Liming, chief editor of China Software Information Network, believes that Hon Hai Group’s strongest advantage lies in its OEM business. Assembling products for Apple has enabled Hon Hai to achieve two-fifths of sales, but smart Mr. Gou certainly is not satisfied with the status quo. Controlling the entire industry chain is the most popular corporate strategy nowadays. Terry Gou certainly does not miss any chance. From the layout of Hon Hai's layout, Terry Gou slowly climbs up.

It is reported that before, Hon Hai has bought most of Sony's TV assembly business, while Hon Hai also holds shares of Taiwan-based panel maker Chi Mei Optoelectronics, but these are not enough to increase Hon Hai’s advantage in the industry chain. Because compared with Sharp, CMO is still lacking advanced technology in the field of panel manufacturing, and the deal with Sharp makes up for the missing link.

In addition, some people in the industry pointed out that although Apple has contributed huge sales to Hon Hai, Apple cannot give Hon Hai real security. Recently, there was news that Apple will hand over the iPad3 order to Shanghai Sunteng OEM. Previously, all of the iPads were manufactured exclusively by Foxconn under the Hon Hai Group.

At present, Foxconn’s continuous salary increase for its employees means a significant increase in labor costs. This is unacceptable for Apple, a company that has a near-demanding supply chain cost control. Lu Junshang, Secretary General of the National 3D Contest and President of 3D Power, told reporters that Hon Hai has not been able to obtain much benefit from assembling iPads and iPhones. Since Apple's product design, development and other important aspects are mainly conducted in the United States, Apple still Is the biggest beneficiary. According to the Apple iPad's value composition chart, the two biggest costs are the profitability of raw materials and Apple itself.

Although the iPad was assembled in the Mainland, the value of the workforce is still extremely small: only about 2% of the cost. While Apple's profit from the iPhone is higher, Foxconn only benefited from the iPhone by 1.8%. "For Gou, only through mergers and acquisitions in the upper reaches of the industrial chain can we find new outlets for Hon Hai in the ever-compacting profit space, and we can only get rid of dependence on Apple," said Lu Junshang. (Editor: Lecea)