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Foxconn’s Terry Gou to Return After Failed Presidential Bid
February 02, 2020
Terry Gou, at the company's Lunar New Year party in Taipei on Jan. 22 said he is now returning with full force to Foxconn, which has grown into the world's largest contract manufacturer with over $170 billion in annual sales. But he also touched on his failed presidential run, hinting at his continued interest in the political arena. Gou is expected to keep his successor, Chairman Young Liu, in charge of day-to-day management. He instead will focus on launching a global fund that will invest in technology companies from the U.S., Japan, Germany and Israel, which he envisions as a driver for the group's future growth. The company posted record net profits for six straight years through 2016. But analysts indicate company will suffer a third year of declining profit in 2019, due to a saturated smartphone market and rising wages in China. With contract manufacturing no longer as profitable as it once was, Foxconn is pressed to find new business models. Foxconn's attempts to branch out have not been very successful. It shocked markets on Jan. 16 when it announced that it will develop electric vehicles through a joint venture with Fiat Chrysler Automobiles. But FCA immediately issued a statement saying there is "no assurance that final binding agreements will be reached," tempering expectations. Sharp, which Foxconn acquired in 2016 as part of its shift away from contract manufacturing, is struggling to lift its net profit ratio significantly above 3%. Its share price has not changed much since 2016. Shadows loom over Foxconn's plans to build multibillion-dollar liquid-crystal display factories in the U.S. and in China. The U.S. factory, which Gou announced in 2017 with U.S. President Donald Trump at his side, is now expected to be much smaller than originally planned. The market appears unimpressed by these efforts. Foxconn's stock price remains about 40% lower than its record high from 2017, and investors were cool on Gou's fund proposal.
Foxconn’s Terry Gou to Return After Failed Presidential Bid
February 02, 2020
Terry Gou, at the company's Lunar New Year party in Taipei on Jan. 22 said he is now returning with full force to Foxconn, which has grown into the world's largest contract manufacturer with over $170 billion in annual sales. But he also touched on his failed presidential run, hinting at his continued interest in the political arena. Gou is expected to keep his successor, Chairman Young Liu, in charge of day-to-day management. He instead will focus on launching a global fund that will invest in technology companies from the U.S., Japan, Germany and Israel, which he envisions as a driver for the group's future growth. The company posted record net profits for six straight years through 2016. But analysts indicate company will suffer a third year of declining profit in 2019, due to a saturated smartphone market and rising wages in China. With contract manufacturing no longer as profitable as it once was, Foxconn is pressed to find new business models. Foxconn's attempts to branch out have not been very successful. It shocked markets on Jan. 16 when it announced that it will develop electric vehicles through a joint venture with Fiat Chrysler Automobiles. But FCA immediately issued a statement saying there is "no assurance that final binding agreements will be reached," tempering expectations. Sharp, which Foxconn acquired in 2016 as part of its shift away from contract manufacturing, is struggling to lift its net profit ratio significantly above 3%. Its share price has not changed much since 2016. Shadows loom over Foxconn's plans to build multibillion-dollar liquid-crystal display factories in the U.S. and in China. The U.S. factory, which Gou announced in 2017 with U.S. President Donald Trump at his side, is now expected to be much smaller than originally planned. The market appears unimpressed by these efforts. Foxconn's stock price remains about 40% lower than its record high from 2017, and investors were cool on Gou's fund proposal.
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