Will Robots Boost Profits For Apple, Inc?

Apple contract manufacturer Foxconn might use robots to help assemble iPhones

Jul 8, 2014 at 4:00PM

A tidbit of information from the recent shareholders event held by contract manufacturer Foxconn got the blogoshere and fanboys of Apple, (NASDAQ:AAPL) in a tizzy recently. One translation of the meeting minutes indicated that Foxconn will use 10,000 robots during assembly of the new iPhone, rumored to be released this fall. Subsequent reports indicated that robots will not play an important role in the manufacturing of the device. At least not today.

How could this affect investors of Apple and competitors like Samsung Electronics Co., LTD (NASDAQOTH:SSNLF)? Another major Foxconn customer, Google, (NASDAQ:GOOG) (NASDAQ:GOOGL), is already involved in robotics and automation. 

Foxbots
The trend toward factory automation is important in the mobile industry. As average selling prices decline, manufacturers will need to firm up margins or become less profitable. Reducing production costs by introducing robotics could go a long way toward making that happen.

Foxconn would likely collaborate with its most important customer in any such venture. The Taiwanese company relies on Apple for nearly half of its revenue, and of course would like to see the relationship continue. In an effort to stay ahead of its main rival Samsung, Apple has committed to spend $10.5 billion during fiscal 2014 on new technology, including advanced manufacturing methods such as robots.

The so-called "Foxbots" won't be able to do the majority of the assembly right now and would probably be only used in some operations like polishing of displays, movement of equipment around the factory, and testing. Most tasks would be too complicated even for the bots. In a more immediately bullish sign for Apple, Foxconn reportedly is bringing 100,000 additional workers onboard to meet the anticipated high demand for the new iPhone. 

More success for Apple would come at a bad time for Samsung. The South Korean company recently announced less than stellar results that missed most analyst estimates. Samsung states that growth should pick up going forward but then it will have to struggle to deal with the upcoming iPhone release and increased competition in the low-end from upstarts in China. The company is getting it from both sides. It might be best to avoid Samsung stock for now.

GoBots
Google is investing heavily in robotics. It was announced last year that the company has acquired at least eight robotic firms. No word on exactly how automation would fit in yet but it's possible that the technology would be used in the self-driving cars that are under development or in the burgeoning Internet of Things which Google is involved in. Maybe a robomaid around the house to go along with the Nest smart thermostat. However, any benefit would likely be many years away. 

Google Robot

Google Images

For now shareholders will have to be content with Google maintaining its dominant position in Internet search which generates billions in ad revenue for the company. Google has been investigating ways to ensure that the success continues. A project that would involve hot air balloons, and maybe drones and satellites, to expand Internet access to hard-to-reach locations is under way. Management probably figures that the more users that go online the more would navigate Google's way. 

Lots of innovation going on at the Googleplex. Let's see if it pays off someday.

Foolish conclusion
A report that contract manufacturer Foxconn will use robots to help assemble the iPhone is generating a lot of discussion within the smartphone industry. Whether the rumor is true or not probably will not have any immediate impact for Apple investors. A more credible report that Foxconn is boosting its staff by up to 100,000 to expand iPhone production may be more bullish.

However, over the long term, the increased use of automation in the industry could pay off for Apple (and Samsung if the South Korean company goes the same route) by reducing production costs. Google's interest in robotics may be linked to its driverless car or the Internet of Things, which probably won't move the needle for the company for some time. Shareholders may have to rely on continued success from Internet search for now.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

 

Mark Morelli owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers