Consider, if you will, a scenario where Foxconn Technology Group enjoys margins three times fatter than Apple Inc. That may be hard to imagine because the developer of iPhones is one of the largest companies in the world, earning close to $100 billion annually, while the one that makes those devices brings in 5% of that.
But this was once the case. The year was 1996, and Hon Hai Precision Industry Co. — Foxconn’s flagship — posted a gross margin of 31% while Apple delivered just 9.8%. It was a historic low for the Cupertino company, during Steve Jobs’s hiatus from the business he founded. It was also a record high for the Taiwanese electronics manufacturer. The roles have since switched and last year they posted figures of 42% and 6%, respectively.
