Foxconn Electronics (the registered trade name of Hon Hai Precision Industry) is gearing up to expand its own-brand presence in the market for PC-use components, including motherboards, graphics cards, fans, chassis and connectors, according to Christin Wang, global marketing sales manager of Foxconn's Channel Service Division.
According to Foxconn's business model, the company avoids conflict between the manufacturing and own-brand sides, Wang noted, adding that the company separates the two operations very clearly. Foxconn will retain closed ties with its contract customers while showing strength in the PC component market, stated Wang.
"Foxconn" registered for component brand
As chairman Terry Gou stated earlier, Foxconn's own-brand business covers components used in its so-called "6C" strategy - Component, Consumer, Communication, Channel, Car and Content, according to Wang.
The "Foxconn" brand was actually established in 2004 for component products, but the brand name wasn't pushed extensively until there was a certain level of brand awareness, Wang stated. Foxconn's entry into the own-brand PC component market officially took place in 2006, said Wang.
In response to earlier speculations that Foxconn's might enter the own-brand notebook, handset and MP3 player markets, Wang asserted that Foxconn's own-brand business would definitely not include any system products in order to maintain a clear distinction between its own-brand products and its assembly products for customers.
"Foxconn" brand expansion in the motherboard market
The channel service division at Foxconn was established at the end of 2004, with its 14 regional sales offices worldwide located in Europe, the US, Middle East, Russia, China, and Central and Latin America, Wang indicated. Foxconn initially entered the motherboard markets in Europe and Latin America in the second half of 2004 and has gradually expanded its branded presence in the Asia-Pacific region from the end of last year, according to Wang.
For motherboards, Foxconn enjoyed on-year shipment growth of 138% in the first quarter of this year, thanks to strong contributions from China and Russia, said Wang. Foxconn anticipates its branded motherboard shipments worldwide will climb to nine million units in 2006, up from last year's record of six million units.
In China, Foxconn has a total of seven sales offices, in addition to its manufacturing sites in Shenzhen and Kunshan. Foxconn will add a new branch office in India later this year, following the establishment of its German branch office during the CeBIT show in Hannover in March, Wang said. Wang believes there is potential growth in the India motherboard market in the future.
Although Wang declined to comment on Foxconn's motherboard shipments to its customers, statistics compiled by the Taiwan motherboard industry indicate that Foxconn's motherboard shipments was only behind the number one motherboard maker Asustek Computer in 2005. As reported earlier, Foxconn shipped 40 million motherboards last year, following Asustek with 52 million units.
Foxconn chairman Terry Guo suggested that there would be a downturn in the overall PC market during the beginning of 2006, prior to the implementation of the Restriction of Hazardous Substances (RoHS) legislation in the EU and concerns of overbooking, according to Wang. Guo's foresight limited possible damage to the company, stated Wang. Foxconn has a goal of "zero inventory" at its factories all the time, Wang said.
Foxconn would like to carry its success in the motherboard distribution market to the graphics card segment, noted Wang.
"Foxconn" steps into graphics card market
At CeBIT 2006 in Hannover, Foxconn unveiled its first own-brand graphics card, the PX7900GTX based on the Nvidia GeForce 7900 GTX graphics processing unit (GPU), with volume shipments starting at the end of the second quarter. Although the PX7900GTX wasn't manufactured by the company itself and the company's first step into the market seemed muted, Foxconn decided to officially announce its entry in the own-brand graphics card market during the week of Computex by displaying a lineup of "Foxconn-branded" graphics cards which are all powered by Nvidia graphics solutions.
Foxconn's self-developed own-brand graphics cards are expected to be available by August of this year, according to Wang, expecting that the company will ship one million own-brand graphics cards in 2006. Besides Nvidia solutions, Foxconn currently has no plans to launch ATI-based products, said Wang.
Market speculations say that Foxconn's strong ambition in the own-brand graphics card market may threaten other leading graphics card suppliers, including Asustek, Gigabyte Technology, Micro-Star International (MSI), China's Palit Microsystems, and Elitegroup Computer Systems (ECS), which just resumed its graphics card business this year.
Christin Wang, Global Marketing Sales Manager of Foxconn's Channel Service Division
Photo: Jessie Shen, DigiTimes
Article translated by Jessie Shen and edited by Eric Mah
