Today I ran across three articles in the Wall Street Journal. Independently they just look like normal shifts and changes in the market, but when you combine them all it leads to a lot of questions about manufacturing and IP ownership by large electronics companies like Apple and Dell and others.
First, there was an article about Foxconn and that they were forced to shut down manufacturing plants in China because of new lockdowns. Foxconn, it turns out, manufacturers the Apple iPhone as well as some of Apple’s computing products.
Then, there was an article about Foxconn being in talks to build a $9 billion factory in Saudi Arabia. This makes sense because if they’re having to shut down plants in China yet again, they need to look for somewhere else to manufacture. It was mentioned in the article that in addition to the other things that they’re planning on manufacturing in this new plant in Saudi Arabia would be included the Apple iPhone. That perked my interest even more because of what I’m going to get to later.
Finally, there was an article whose headline was, “Saudi Arabia Invites China’s Xi to Visit Kingdom Amid Strained U.S. Relations.”
To me those three articles somehow all go together. This is nothing more than a guess, but it looks like China is going to lose some large business deals as a result of the renewed lockdowns and they’re looking to avoid it somehow. Either they are trying to keep that business (Foxconn/Apple) by having a discussion with Saudi Arabia, or perhaps they’re looking for a way to compensate for that revenue loss.
Who knows, really, but all this led me to an idea.
In the old days in the 1990’s, which is really not so long ago, large companies had their own manufacturing plants. As much as possible was kept in-house. Companies like Sun Microsystems and Apple and IBM had their own plants to manufacture key IP-laden components and to do the final assembly. Those key components never, ever, went into the hands of another company. They used contract manufacturers and in those days those were generally in Taiwan and maybe in China, but those 3rd parties were used only for small introductory runs to test a market or sometimes to produce components or subsystems. Companies never put control or custody of the end product into the hands of a manufacturer in China. The reason they did that, in large part, was to protect their IP because there was just so much theft going on. You would send an ASIC overseas and before you knew it, it would be reverse-engineered and the next thing you knew some competitor 3rd tier company would be coming out with a product that violated your IP and you had no way to protect it because it was China. So now companies like Foxconn in China manufacture whole products for companies like Apple, and that just makes me wonder if IP protection has gotten so much better that you don’t need to worry. Has global IP protection gotten so much better that you don’t need to concern yourself with a third party having total control over your product, or do companies just not care about protecting their IP anymore?
So that’s the big question for this week for me. Do companies actually care about protecting their IP, or are they really just in a race to produce the next big thing and get it to market firstest with the mostest, make as much profit as possible before the knockoffs hit the market, and move on to the next new big thing?