Unveiling the powerhouse that drives Foxconn’s transformation

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Foxconn Chairman Young Liu speaks during a news conference in Taipei, Taiwan, on March 16. (Johnson Lai/AP)

TAIPEI, Taiwan – As the world’s largest electronics contract manufacturer, with products ranging from Apple’s iPhones to Nintendo Switches, Foxconn Technology Group has been seeking to move up the value chain, and boost its chronically thin gross margin between 3-4 percent, according to an interview with Fusionmedium. Less than a month ago, Foxconn just showcased for the first time its EV prototypes and the software platform it developed with partners.

Young Liu, Foxconn chairman, is expecting to boost Foxconn’s gross margin to 7 percent by the end of 2021, and aiming for a gross margin above 10 percent the long term. To realize the ambition, Foxconn has come up with a so-called “3+3 strategy” targeting the EV, robotics and digital health industries, backed by the key enabling technologies of AI, semiconductor, and 5G.

‘From brawn to brain’

Foxconn Research Institute, founded in early 2021, has been charged with this transformation, a process termed by Foxconn as “from brawn to brain.” In 2021 CONNECT, an annual tech event hosted by TechTaiwan and TechOrange, the chief executive officer of Foxconn Research Institute, Wei-Bin Lee, explained the philosophy and the strategic role of the Institute within Foxconn’s overarching goal.

Lee, formerly a commissioner of Taipei City Government in charge of information technology, has an academic background rooted in network security, cryptography, and information security management.

According to Lee, Foxconn’s multiple business groups have already matured, and are able to identify the products in the coming 1-2 years. A solid R&D foundation, however, is what Foxconn needs to look further beyond, grasping the trends in the next 3-5 years. In this sense, Foxconn Research Institute is a stabilizing factor in the company, proving a technological roadmap to the future.

Driven by down-to-earth topics

For Foxconn Research Institute, it is not a priority to pour in R&D resources: as long as an overarching strategy for the entire technology group can be first identified, then the relevant logistics can be provided. As Lee explained, Foxconn Research Institute differed from other R&D units created by tech giants like AT&T, Google and Microsoft. “Foxconn doesn’t do purely experimental research,” said Lee, “its research focuses are always guided by the overall corporate strategies, and driven by down-to-earth topics developed in accordance.”

Currently, there are five research centers under Foxconn Research Institute, each focusing on a key sector: AI, semiconductor, next-generation communications, information security, and quantum computing. Every research center is staffed by an average of 40 professionals.

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