To call Apple Inc. (AAPL) a technology behemoth is an understatement. The massive scale and margins of the Cupertino, California-based company's iPhone manufacturing operations have the power to move industries and change company fortunes. Apple's iPhone ecosystem is large and touches multiple industries. Here are two companies have benefited from Apple's reinvention of smartphones. (See also: 10 Major Companies Tied to the Apple Supply Chain.)
The iPhone's initial batch of prototypes had plastic screens. But Apple's legendary co-founder Steve Jobs demanded new screens after discovering scratch marks on his phones. Apple turned to Corning, an American institution that pioneered research into glass technology, to accomplish the change. The company's Gorilla Glass, which is essentially strengthened glass, set a new design paradigm for smartphones.
As Apple and the market for smartphones grew, so did Corning. Its involvement in the smartphone industry brought Corning welcome attention and orders, and the company revived a manufacturing facility in Kentucky. Recently, the New York-based company also became the first recipient of money from Apple's Advanced Manufacturing Fund to create jobs for manufacturing in America. Corning said that it would use the $200 million awarded by Apple to "sustain" its employees in their research endeavors. (See also: Apple Awards Corning $200M From Advanced Manufacturing Fund.)
Foxconn Technology Group
Corning's strengthened glass is cut into iPhone-sized pieces at the facilities of Hon Hai Precision Industry Co., Ltd. (2317.TW), also known as Foxconn Technology Group, in China. The Taiwan-based company is one of the world's largest manufacturers, with a diverse array of factories in locations ranging from Brazil to Mexico. However, its main claim to fame rests on its status as an Apple supplier. iPhones are assembled in Foxconn City, a massive special export zone in Shenzhen.
Estimates vary, but Apple is said to account for between 40 percent and 60 percent of Foxconn's overall revenue. Hence, its profits are inextricably tied to iPhone sales figures. Foxconn's share price received a boost of almost 155 percent after the iPhone was released in 2007. Last year, it reported a slide in profits due to pressure from low iPhone sales. Earlier this year, Foxconn said it was mulling a $7 billion investment into a display manufacturing plant in the United States. The plant would be built in cooperation with Apple. (See also: Apple Supplier Foxconn Confirms U.S. Expansion Talks.)