For example, Foxconn makes the iPad, but doesn’t have an exclusive lock on the iPad mini. That new product is reported to be taking market share from the full-sized iPad. So, Apple Inc. (NASDAQ:AAPL) may not be seeing a slowdown at all, it might just be a sales mix issue that is shifting business away from Foxconn.
Tech Crunch, meanwhile, has suggested that the hiring freeze may be related to Foxconn preparing to install robots on its assembly lines. That may seem far-fetched in country with so many cheap laborers, but perhaps not. For example, Bloomberg notes that, “Foxconn has more than doubled wages and cut hours for workers…” With costs heading higher, saving money through technological innovation is key.
As an example, take a look at Amazon.com, Inc. (NASDAQ:AMZN)’s automation efforts in its warehouses. Warehouse fulfillment was traditionally a low-skilled manual effort. However, Amazon began using a robotic system made by Kiva Systems.
The technology was so good, that Amazon eventually bought Kiva for nearly $800 million. While this could be a way for Amazon to get into competitors’ fulfillment centers, there is no doubt that the company has improved the mundane task of filling boxes with robots. Imagine what automation could do for Foxconn’s high-tech business.
Don’t Read Too Much Into this
At the end of the day, there are just too many moving parts to use Foxconn as a reason to dump on Apple. If you are watching for a turn at Apple, watch the top and bottom lines. There’s no reason to try to time the turning point, there will be plenty of upside if you wait for a more defined entry point.
The article The Mistake Of Tracking Apple’s Decline Via Foxconn originally appeared on Fool.com.
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