Looks like the making cost of Apple i-products are getting cheaper. Apple’s profit margins have widened at the expense of its main supplier as Foxconn cuts prices to retain orders for the iPhone and iPad. According to Bloomberg’s report, the profit spread at Hon Hai, Foxconn’s Taipei-listed flagship, has narrowed to 1.5 percent since the debut of the iPhone in June 2007 as Apple’s operating margin more than doubled over the past five years, surpassing 30 percent …
Hon Hai’s operating margin declined in most of the quarters in which Apple’s rose and widened when its main customer’s narrowed. Hon Hai has boosted its workforce, raised wages and expanding factories to keep up with the demand, though not fully passing along its additional costs. Foxconn CEO Terry Gou has told his shareholders last year that the Apple iPad is difficult to produce, but his strategy still earned him the nickname ‘Low-Cost Terry’. According to Taiwan analyst, Hon Hai is willing to sacrifice margins so it can get volume and scale. As for Apple, they are also getting so large that it needs a supplier that can provide a lager scale of production.
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