3 ms·

"When Apple's iPhone4 was nearing production, Foxconn and Apple discovered that the metal frame was so specialized that it could be made only by an expensive, l

"When Apple's iPhone4 was nearing production, Foxconn and Apple discovered that the metal frame was so specialized that it could be made only by an expensive, low-volume machine usually reserved for prototypes. Apple's designers wouldn't budge on their specs, so Gou ordered more than 1,000 of the $20,000 machines from Tokyo-based Fanuc. Most companies have just one."

eitally 16y ago
So?
- eitally 16y ago
  I knew this was coming when I didn't elaborate on my response, but I don't really see what the parent was trying to get at. Apple uses Foxconn/Hon Hai because they are the biggest and the best at mass manufacturing consumer electronics. Foxconn is the only EMS company with the scale to depress supply chain costs to a point where they can actually make money on tiny margin products (like cell phones, mp3 players, and even PCs[1]). I am 100% sure the tooling debate arose during the planning phase, and I'm also 100% sure that it's in both Foxconn's and Apple's best interest for Apple not to have to go elsewhere. At the end of the day, a machinery investment like this isn't just going to support the iPhone contract (though it will be used by Foxconn in future negotiations, I'm sure), but other similar business they win. Here's another tidbit: Foxconn doesn't use Fuji pick & place machines. Anecdotally I've heard it's because Fuji is a Japanese company, and since there's a viable non-Japanese alternative -- Siemens[2] -- there's no need to use Fuji. However, what Foxconn did was negotiate an exclusive contract with Siemens so that they'd have the exclusive manufacturing contract for Siemens Siplace line and in return they'd commit to only using the Siemens equipment themselves. At their scale -- thousands of SMT lines, with each machine costing in the $250k range, this saves many millions each year. I work in this industry and am happy to answer any questions about electronics manufacturing. [1] Taiwanese companies like Quanta and Compal are excelling at laptop design and manufacturing, and in some cases Acer and Asus still build their own products, but almost all of it is outsourced to Quanta & Compal. [2] http://ea.automation.siemens.com/11116/Products/Placement-Systems/aud_index.aspx http://ea.automation.siemens.com/11116/Products/Placement-Sy...
karzeem 16y ago
I wonder if Foxconn charged Apple commensurately more.
patio11 16y ago
You can count to twenty million very, very quickly in manufacturing. There are individual buttons in and near Nagoya that cost more if you press them once.
- mechanical_fish 16y ago
  I believe it was Intel that used to joke about the "million-dollar club". The story I heard is that, as a fab engineer, you got admitted to the club by accidentally spoiling one lot of wafers, each of which represented more than one million dollars in gross revenue. Since there are many, many potential process mistakes that can spoil an entire lot at once, the implication was that you weren't going to remain outside the club for very long.
  - patio11 16y ago
    Wait until someone forgets to tick off "Items to be returned to toolbox: ... #32) Phillips Screwdriver (1)" prior to testing ignition on a prototype aircraft engine. A million will sound cheap. Have I mentioned that the engineering culture in this neck of the woods takes checklists very effing seriously?
ZeroGravitas 16y ago
Anyone else find it odd that they didn't see this coming? It's either scarily bad planning on Apple's part (let's not rule it out given their white iPhone 4 woes), or scarily bad journalism trying to turn "buying new machinery to manufacture a new part" into something exciting. Even if you count only the first month of US sales that's only $7 per iPhone.

eitally 16y ago

So?

eitally 16y ago
I knew this was coming when I didn't elaborate on my response, but I don't really see what the parent was trying to get at. Apple uses Foxconn/Hon Hai because they are the biggest and the best at mass manufacturing consumer electronics. Foxconn is the only EMS company with the scale to depress supply chain costs to a point where they can actually make money on tiny margin products (like cell phones, mp3 players, and even PCs[1]). I am 100% sure the tooling debate arose during the planning phase, and I'm also 100% sure that it's in both Foxconn's and Apple's best interest for Apple not to have to go elsewhere. At the end of the day, a machinery investment like this isn't just going to support the iPhone contract (though it will be used by Foxconn in future negotiations, I'm sure), but other similar business they win. Here's another tidbit: Foxconn doesn't use Fuji pick & place machines. Anecdotally I've heard it's because Fuji is a Japanese company, and since there's a viable non-Japanese alternative -- Siemens[2] -- there's no need to use Fuji. However, what Foxconn did was negotiate an exclusive contract with Siemens so that they'd have the exclusive manufacturing contract for Siemens Siplace line and in return they'd commit to only using the Siemens equipment themselves. At their scale -- thousands of SMT lines, with each machine costing in the $250k range, this saves many millions each year. I work in this industry and am happy to answer any questions about electronics manufacturing. [1] Taiwanese companies like Quanta and Compal are excelling at laptop design and manufacturing, and in some cases Acer and Asus still build their own products, but almost all of it is outsourced to Quanta & Compal. [2] http://ea.automation.siemens.com/11116/Products/Placement-Systems/aud_index.aspx http://ea.automation.siemens.com/11116/Products/Placement-Sy...

karzeem 16y ago

I wonder if Foxconn charged Apple commensurately more.

patio11 16y ago

You can count to twenty million very, very quickly in manufacturing. There are individual buttons in and near Nagoya that cost more if you press them once.

mechanical_fish 16y ago
I believe it was Intel that used to joke about the "million-dollar club". The story I heard is that, as a fab engineer, you got admitted to the club by accidentally spoiling one lot of wafers, each of which represented more than one million dollars in gross revenue. Since there are many, many potential process mistakes that can spoil an entire lot at once, the implication was that you weren't going to remain outside the club for very long.
- patio11 16y ago
  Wait until someone forgets to tick off "Items to be returned to toolbox: ... #32) Phillips Screwdriver (1)" prior to testing ignition on a prototype aircraft engine. A million will sound cheap. Have I mentioned that the engineering culture in this neck of the woods takes checklists very effing seriously?

ZeroGravitas 16y ago

Anyone else find it odd that they didn't see this coming? It's either scarily bad planning on Apple's part (let's not rule it out given their white iPhone 4 woes), or scarily bad journalism trying to turn "buying new machinery to manufacture a new part" into something exciting. Even if you count only the first month of US sales that's only $7 per iPhone.