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Business

Foxconn develops glass casing as iPhone redesign expected

TAIPEI -- Hon Hai Precision Industry, better known as Foxconn Technology Group, is developing a glass casing for smartphones as its key client Apple Inc. is said to be revamping the iPhone, people familiar with the developments say.

Apple is expected to redesign the iPhone, including giving it a glass chassis, in 2017 to boost weakening demand and to see off stiff competition from rivals, including South Korea's Samsung Electronics and China's Huawei Technology, whose phones use Android platforms.

Determined to secure its position as a key iPhone assembler, Foxconn is developing its glass casing technology. "Foxconn has been trying glass chassis since last year," a person with knowledge of the Apple supply chain in Taiwan said.

Another source said: "It is only natural that Foxconn is trying to come up with glass chassis as the capabilities to provide more components will bolster its standing within the supply chain and help with more orders."

Foxconn declined to comment. Foxconn is now a key iPhone assembler and a key metal casing supplier for the U.S. company. The Taiwanese manufacturing titan dominates metal casing for iPhone 6s Plus, the upcoming iPhone 7 Plus and iPhone SE.

For the 4.7-inch iPhone 6s and iPhone 7, Apple's orders are shared between Foxconn, Taiwan's Catcher Technology and U.S.-based Jabil. But whether Foxconn will eventually become a glass casing supplier for Apple remains to be seen.

Foxconn generates more than 50% of its sales from Apple. In 2015, it reported a record year with a net profit of 146.86 billion New Taiwan dollars ($4.67 billion) on revenue of NT$4.48 trillion, thanks to the popularity of iPhone 6 and iPhone 6 Plus. Its capex was NT$71 billion in 2015.

Market watchers suggested that Apple's new iPhones would adopt glass casings with metal frames and advanced organic light-emitting diode (OLED) panels, a design Samsung already uses for its premium handsets. This will give iPhones developed in 2017 a sleeker look and a brighter, more energy-efficient display.

The makeover will be a significant departure from the metal chassis and low-temperature polysilicon (LTPS) panels sported by the upcoming iPhone 7 and current iPhone 6 models.

The Nikkei Asian Review reported in May that Catcher Chairman Allen Horng said there would only be one iPhone model to use a glass chassis next year, the first official confirmation of Apple's new design.

According to media reports, Samsung would be the main OLED panel supplier for iPhones, and China's Biel Crystal and Lens Technology, which currently makes front glass covers for iPhones, would provide the glass casings.

Foxconn is also developing its own advanced OLED technologies with the acquisition of embattled Japanese electronics conglomerate Sharp earlier this year.

iPhone under siege

Since the beginning of 2016, Apple has been grappling with weakening appetite for its premium iPhone 6s and iPhone 6s Plus handsets across the globe.

Apple's sales dropped year-over-year for the first time in 13 years in the January-March period, and continued its downward trajectory in the following three months.

Its average selling price fell in the quarter ended in June, suggesting stronger demand for its lower-priced iPhone SE, while sales in greater China plummeted 33%. Analysts said Apple would ship fewer phones this year compared to 2015.

By contrast, Samsung Electronics and Huawei both enjoyed reasonable sales growth in the first half, helped by strength in their smartphone businesses. Samsung, Apple, and Huawei are respectively the world's No.1, No.2 and No.3 smartphone brands by shipments.

It is the first time that Apple has come under such pressure since it launched iPhones in 2007. The competition is so fierce that Apple killed off a premium iPhone 7 model in the second quarter, less than six months before its official launch in September, according to a source.

Initially, Apple had planned two versions of iPhone 7 Plus, one with a single lens and one with a dual lens. The single lens edition has since been ditched, the source said.

"This never happened before. Before this year, Apple never made changes to iPhone's product line mere months before the launch. It has been a volatile year for Apple," a source said.

Apple did not immediately respond to a request seeking comments.

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