As the profit margins are getting smaller and smaller, foundry companies like Foxconn have left most of their profits to upstream brand manufacturers. Data shows that for a mobile phone worth five or six thousand, Apple’s gross profit margin is 40%, while Foxconn’s is less than 10%. Although the cost of cheap labor has been brought into full play, in the capital market, since the financial crisis in 2008, Hon Hai's share price has plummeted by more than 60%.
  Increasing income without increasing profits has become a painful way of survival for Chinese OEM companies in recent years. The extremely bad competition has overwhelmed Chinese OEM companies. As a global foundry company and a multinational company with strong cost control capabilities, Foxconn took the lead in saying goodbye to Shenzhen's westward move to the north. With the goal of reducing costs, it sounded the rallying cry for the transfer of China's foundry industry.
   Foxconn President Guo Taiming said that the fourth-generation Foxconn will invest in Gui'an New District, Guiyang City, and follow the development path of industrial research and development, software research and development, and cloud network. However, it is difficult to achieve industrial transfer overnight. What's more, the price depression formed by the incomplete marketization of production factors will be filled by the continuous reform. For enterprises, if they continue to follow this price depression shift, it will be impossible to turn around.
   Guo Taiming is very clear that fundamentally speaking, it is necessary to deal with the industrial upgrading of the continuous marketization of production factors, improve profit margins through industrial upgrading, and deal with rising costs. He not only proposed to speed up the application of robots to promote factory automation, but also launched his own brand for transformation.
   But analysts point out that using robots is not a one-size-fits-all approach, for two reasons:
  1. Funding issues. Due to the different types of work used by robots, the manufacturing costs are also different, ranging from tens of thousands, hundreds of thousands or even millions of yuan. At the same time, the maintenance costs during use and the costs incurred in the process of technological change and updating are also incalculable. Analysts expect capital-related annual spending to build automated factories of at least $2.1 billion, and possibly more than $10 billion, while Foxconn's previous capital spending has remained at around $3 billion. In addition, Foxconn's profit margin has been on a downward trend since the second quarter of 2010 due to rising wages for mainland workers.
  2. Social responsibility. Although the use of robots to replace manual operations can effectively alleviate the problem of employee conflicts, the introduction of robots means that the labor force is laid off. Analysts said that Foxconn's promotion of production automation is not welcomed by the Chinese government, because Foxconn has created a large number of jobs fairly steadily, and has created a large number of jobs for the whole country. Job opportunities are available for people everywhere.
  The imperfect market mechanism, inefficient resource allocation, and insufficient patent knowledge reserves have been restricting the speed of Foxconn's industrial upgrading. Foxconn proposed to transform from "manufactured Foxconn" to "technology Foxconn" as early as 2003, but seven years later Foxconn is still "manufactured Foxconn". For China, industrial upgrading is still "a long way to go".
  Where should China's foundry industry go? Is it industrial transfer or industrial upgrading? There is no doubt that the role of Chinese enterprises in the global industrial value chain must be shifted and upgraded again and again, from "OEM manufacturing" to "high value creation". If in another 10 years, China's foundry industry still cannot complete the industrial upgrading, then the choice faced by China's foundry industry will be to move abroad or decline.