October 24, 2017 1:08 am JST

Foxconn's Gou met Apple exec to discuss iPhone X

Closed-door confab comes as suppliers scramble to meet expected strong demand

CHENG TING-FANG and DEBBY WU, Nikkei staff writers

The TSMC event drew executives from tech titans Apple, Nvidia, Qualcomm, ARM Holdings and Broadcom. (Photo by Cheng Ting-Fang)

TAIPEI/SHANGHAI -- Chairman Terry Gou of Hon Hai Precision Industry, also known as Foxconn Technology Group, met Apple Chief Operating Officer Jeff Williams behind closed doors to discuss iPhone X production, a source familiar with the matter told the Nikkei Asian Review on Monday, amid reported problems with the key facial-recognition technology used by the cutting-edge device.

The source did not provide the details of their discussions.

The Nikkei Asian Review first reported on Friday that the two executives were set to meet when Williams visited Taiwan for the 30th-anniversary celebration of Taiwan Semiconductor Manufacturing Co., the sole supplier of the iPhone's core processor. The event took place on Monday afternoon at a hotel in downtown Taipei.

Foxconn is exclusively responsible for assembling the iPhone X.

The meeting between Gou and Williams came as Apple suppliers have been scrambling to churn out the iPhone X in large enough quantities to meet apparently strong demand despite ongoing problems with the dot projector, a component in the 3-D sensor module responsible for facial-recognition functions. The iPhone X is that first smartphone to allow users to unlock handsets and make payments through facial recognition.

Apple suppliers continue to struggle with a low yield rate, which refers to the number of usable units in a batch of components or products produced in a manufacturing process, and affects a company's margins and bottom line.

As a result, the American tech giant and its 3-D sensor manufacturing partners could see their earnings take a hit in the current quarter.

Although Gou and Williams talked with each other ahead of the TSMC celebrations, the two did not speak during the event, in which the Apple executive was a featured speaker.

Foxconn declined to comment. Apple did not immediately to an emailed request for comment.

AI positivity

During his remarks, Williams said he expects more features related to artificial intelligence and deep learning to be incorporated into future mobile devices. "We think the

phone is a major platform for artificial intelligence, but not exclusively," he said.

Williams added that artificial intelligence could open up a wealth of new opportunities for developers, downplaying some observers' fear that intelligent machines pose a threat to humanity and that developing such technology is dangerous.

"The fear that in the future, machines could somehow take over and start thinking ... I think it's a long way off before [artificial intelligence] is able to do that kind of human thinking," the Apple executive said. "When it comes to specialized deep learning, I think it's going to open up opportunities. I think most of them are not dangerous. I don't worry about it in a next of couple of decades that machines would start to take over the world."

In addition to Williams, two other Apple executives also attended the TSMC function: Johny Srouji, the Cupertino, Calif.-based company's semiconductor czar, and Vice President of Procurement Tony Blevins. Apple is TSMC's top customer by revenue contribution.

Several other leaders from major global semiconductor companies -- which have either supplied equipment or placed orders with TSMC -- were also in attendance. They included: Advanced Micro Devices CEO Lisa Su, ASML Holding CEO Peter Wennink, Broadcom CEO Hock Tan, MediaTek Co-CEO Rick Tsai, Nvidia CEO Jensen Huang, Qualcomm CEO Steve Mollenkopf, and Simon Segars, CEO of SoftBank-controlled ARM Holdings.

Taiwanese President Tsai Ing-wen also made an appearance.

While TSMC celebrated its anniversary on Monday, its smaller U.S-based rival GlobalFoundries held a forum in Shanghai partly to promote its first facility in China, in the central Chinese city of Chengdu. GlobalFoundries officials said they expect the new fab to begin bringing in revenue late next year, increasing the contribution from the Chinese market to overall revenue.

Asia300

Hon Hai Precision Industry Co., Ltd.

Taiwan

Market(Ticker): TAI(2317)
Sector:
Industry:
Electronic Technology
Computer Peripherals
Market cap(USD): 52,624.33M
Shares: 17,328.73M
Asia300

Taiwan Semiconductor Manufacturing Co., Ltd.

Taiwan

Market(Ticker): TAI(2330)
Sector:
Industry:
Electronic Technology
Semiconductors
Market cap(USD): 217,016.60M
Shares: 25,930.38M

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