If you open an iPhone... this is what you’d see.
All of these parts were put together by a company called Foxconn.
And many of the parts themselves are manufactured by Foxconn.
Almost any piece of electronics has at least some components from the company.
Which is owned by this guy: billionaire Terry Gou.
He found success by making massive deals with the world’s biggest tech companies and being
able to follow through.
He's always put client delivery number one, even if at times that means taking a loss
or taking big risks on buying equipment or setting up facilities, because he's confident
that once he lands that order, they're going to be stuck with him.
And it's usually the case.
He’s even expanding operations into the U.S. by building a $14.5 billion factory in Wisconsin.
This is how one man turned a small operation in a shed, into the biggest electronics operation
on the planet.
Foxconn is one of the largest employers in the world, with over 1 million workers during
peak iPhone season.
And that’s a commodity politicians like to offer during election time: JOBS.
So when it came time for President Donald Trump and various U.S. states to decide where
they wanted the promised factory, Gou had them playing against each other for the best offer.
And Wisconsin took the bait, and offered a lot.
They offered massive, massive incentives to get Foxconn there.
Really one of the largest incentive packages in US history.
Critics say the factory will most likely not create as many jobs as promised, and people
are calling it a “white elephant” but Gou doesn’t care.
Wisconsin is paying him $4.5 billion dollars in taxpayers’ money or $1800 per taxpayer.
“We got a Green Bay Packers jersey with your name on it!”
At the end of the day, Terry Gou is a big winner, and it's yet to been seen whether
Wisconsin will be a winner.
Other countries have sought similar deals: including Brazil, Indonesia and even various
Chinese provinces.
And that’s because Gou has a reputation for being able to pull off massive operations,
offering companies a one-stop shop for electronics.
There's no other company in the world that can do what Terry Gou does, even two decades later.
Foxconn is still the master of assembly, and it's because Terry Gou is always looking to
try and look ahead, and trying to keep customers happy.
Early on, Gou saw opportunity by streamlining processes via automation and cutting out middlemen.
In the 1970s Taiwan had a booming export economy.
But most electronics from that time were made in Japan, where the factories were.
And then traded in Taiwan, who had the connections into the western world.
A 23 year old Gou worked as a shipping clerk and got a first hand view of the potential
to make money.
And he realized, “Wow, there's money in this.
Maybe I should go out on my own and do some of this.
Why be the person in the middle when I can be the one doing the actual, original production?"
He decided to go into business for himself.
Using a $7,500 loan from his mother, he rented a shed in a gritty Taipei suburb called Tucheng,
bought a couple of plastic molding machines and started making channel-changing knobs
for black-and-white televisions.
After that he had a series of big breaks, starting with making components for the Atari
and later Dell.
At that time, Dell and other PC companies would buy parts from their suppliers and assemble
them in their own factories.
But Gou created a production line integrating most of these parts and processes, from the
raw steel for PC casings and electrical connectors to the final assembly.
Gou was also among the first wave of Taiwanese to set up factories in mainland China.
He saw the writing on the wall in the 70s, that this was a place to do business, to build
things, to manufacture things.
Not only at a low labor rate, but there was just going to be plentiful staff.
All these years later, 40 years later, it's almost the most perfect government-corporate
partnership in history.
Eventually Gou landed a deal with Apple - and the rest is history.
Over 50% of their estimated $165 billion revenue now comes from Apple.
But it wasn’t always going smoothly.
Foxconn hit international headlines in 2010 after a series of worker suicides at their
main factory in Shenzhen.
I give my greatest apology.
And to put it in context, the suicide rate in China is around 20 per 100,000.
Terry Gou had about a million people working for him at the top of the annual cycle.
So that would imply 200 suicides a year.
But they had 14, well below average, but certainly higher than anyone expected.
And because this was a company supplying to Apple, it became famous very, very quickly
as the Apple supplier and a suicide problem.
After the 2010 scandals, he raised wages, set up healthcare clinics, and even set up
hotlines to give advice to help workers.
Foxconn weathered the crisis, but it was already facing a bigger long-term issue.
For the past decade, revenue for electronics hardware manufacturing has decreased and software
is on the up.
Almost all of the world’s biggest tech companies are now non-hardware.
Gou, who is a manufacturer at heart, hasn’t been able to diversify products.
Foxconn has been trying and trying and trying for years to get into things like cloud services,
software, but they're just not very good at it.
Terry Gou doesn't have that creative thinking.
He doesn't look at a product and say, "How I can I add value and charge more for it?"
And that's the biggest challenge facing Foxconn into the future.