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Apple-Foxconn relationship reportedly eroded by huge differences in profit margins

For years, Apple has used Foxconn as a primary assembler for various products. After all, Foxconn is the largest electronics installer and has gained a solid reputation over time. However, when it comes to pricing, we can all agree that Apple cashes in a premium that customers have to pay if they want to own the company’s product. This premium allows Apple to generate solid quarterly profits, and ultimately this may be why the relationship between the iPhone giant and Foxconn is going through a difficult phase.

Foxconn apparently relies solely on single-digit profits and uses shortcuts when it comes to product testing

Apple reportedly earned 40 percent of the profits, while Foxconn seems to be hanging on to the single-digit brand as it tries to find new ways to increase those margins, according to The Information. However, these decisions can be called questionable if you are an Apple representative. First, Foxconn informs Apple about how many workers are needed before the start of the mass production phase. The information says that it is possible that Foxconn may exaggerate the number of employees to increase its profits.

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Not only that, but the company also uses equipment from Apple to manufacture and assemble products for competitors on the company’s smartphones, something that would not be tolerated in anyone’s book. There are also reports that in an attempt to increase its profits, the assembly giant is not strict and meticulous when it comes to product testing. Naturally, this forced Apple to take certain measures and closely monitor Foxconn, its employees and its daily activities to check whether product testing is going according to the company’s requirements.

Foxconn is said to have used the same tactic when asked to mass-produce Apple’s AirPods Pro, which would be unhappy with its partner because it cost $ 249 to launch, which is not cheap for a pair of wireless headphones. There is no word if Apple and Foxconn have reached an understanding and solved their problems, but knowing Apple, it likes to keep alternatives for this very reason and in the process is able to maintain strong power in the negotiation process.

Do you think it’s unfair for Apple to continue to generate high double-digit profits while Foxconn continues to stay in the single-digit segment? Tell us in the comments.

News source: Information

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