Apple's devices are "very difficult to make," says the head of Apple device supplier Hon Hai, but improvements in efficiency should start to "pay off" later this year.
Speaking yesterday at his company's annual shareholder meeting, Hon Hai chairman Terry Gou admitted that profit growth has been sluggish because of the difficulty in making iPhones and iPads, according to Bloomberg and other sources. Hon Hai's Foxconn unit directly assembles the popular devices for Apple.
Gou's statement confirms other reports that have pointed to manufacturing difficulties in ramping up Apple's latest devices. In a recent interview with CNET, J.P. Morgan analyst Mark Moskowitz said launching the iPad 2 was especially challenging because some of the new features were based on new components that couldn't be manufactured quickly enough.
But Gou said his company is learning new ways to make the manufacturing process more efficient and expects those efforts to pay off in the second half of this year and on into 2012.
"We've helped Apple make a lot of money," Gou said, according to Bloomberg. "If our customers make money, then we can also make money. I most fear customers that don't make money."
Hon Hai is also interested in expanding beyond its partnership with Apple, according to The Wall Street Journal (subscription required). Gou told investors that he's looking to team up with Sharp to develop LCD technology. Hon Hai has also been speaking with other Japanese companies about partnerships designed to cut into the dominance enjoyed by South Korean manufacturers that make display panels and other electronic parts.
Hon Hai's Foxconn unit itself has experienced trouble and tragedy in the past.
Last month, an explosion at the Foxconn plant near Chengdu, China, killed three people and injured another 15. Last year, a spate of worker suicides at the same plant triggered concerns over factory conditions, prompting Apple to step in and attempt to work with management to address the situation.