Foxconn Technology Group, the world’s largest contract manufacturer of electronics, has cut its growth target in half as demand for Apple’s portables fail to offset slowing computer sales, Bloomberg Businessweek reports.
The company’s Chairman, Terry Gou, confirmed the move in an interview at his office in Shenzhen, China yesterday for Bloomberg Businessweek’s upcoming issue.
Gou founded Foxconn in 1974. Apple heavily relies on Gou’s Taiwan factories for producing the parts that make its iPods and iPhones tick.
Gou reportedly plans to tell factory managers that he’s lowering Foxconn’s annual sales growth target to 15 percent from the 30 percent fixture that has been set for more than a decade.
“How many companies have grown this big and still grow 30 percent?”, the 59 year-old Foxconn chairman said. “Fifteen percent is also big.”
According to the report, just like the spate of suicides keeping Gou in Shenzhen since May, the reduced target may underscore the challenges of managing a business that generates more sales than Apple or Dell Inc.
Foxconn is known to employs roughly 1 million workers.
Gou is planning to expand production in the U.S., the report says. To sustain growth, Foxconn will also enter fields such as biotechnology, Gou said.
“I don’t think investors are ready to hear news of such a big cut in the growth target,” said Vincent Chen, who rates shares of Foxconn’s flagship Hon Hai Precision Industry Co. unit “hold” at Yuanta Securities Co. in Taipei.
“These problems, including lower market growth, are giving Gou the biggest challenge he’s ever faced.”
Those eager to learn more about the move can read the full story here.
Gou has his eye on biotechnology companies as acquisition targets, but also plans to expand in industries like nanotechnology and media content, according to the report.
However, Taiwan’s richest man said he will slow Foxconn’s pace of purchases, but declined to identify any company names.