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The rumor that Foxconn will produce its own smartphones may not be all that far-fetched

Foxconn plant iphone appleSmartphones and tablets are today’s hot products, and technology companies all over the world are producing, or planning to produce, their own hardware in the hope of capturing some of the lucrative market. Those that aren’t, run the risk of missing out and being left behind.

It’s not just the big names getting in on the act either, as Digitimes is reporting that Foxconn wants to break into the game too, and that it’s already producing own-branded hardware to be distributed to “telecom carriers and channel operators.”

Now, Digitimes.com has a checkered history with its rumor reports, so it’s advisable not to look at anything they print as 100-percent accurate without independent verification. As wild as Foxconn producing its own phone sounds though, this could be one of Digitimes’ better calls.

As the report notes, Foxconn is looking to repeat HTC’s success. The Taiwanese company started out by making hardware that was badged by networks and other manufacturers — the Palm Treo and several of O2’s Xda series in the UK for example — and has obviously grown into a major force in the industry. It’s hardly a surprise, given Foxconn’s current remit of producing hardware for everyone from Apple to Sony, that it feels it could do the same.

Foxconn is either already working with, or in negotiations with (the report is a little unclear) Commtiva Technology, a company currently tasked with selling Sharp’s smartphones to networks. Commtiva has strong ties with Japanese and Taiwanese networks, where it also promotes the Musn range of smartphones too.

Foxconn’s other businesses

While we may know Foxconn best as the company that makes Apple products, this wouldn’t be the first time it has diversified from its manufacturing role. It has a chain of retail stores in China — some of which are operated by Foxconn employees, after receiving a grant from the company — and plans to open more in Brazil; plus it produces its own-brand computer hardware too, including motherboards and a range of bare-bones PCs.

The computer range provides a glimpse at Foxconn’s possible smartphone plans. They’re stripped down, basic models — the don’t come with any memory or internal storage options — but are fairly cheap at an estimated $280. Most importantly, they don’t wear the Foxconn name, but go by Nano PC instead. Foxconn, often justifiably, has a bad reputation in the West, so anyone buying a Foxconn-branded phone would be ostracized for supporting poor working conditions and child labor. Without a trace of irony, of course.

But Foxconn isn’t likely to be targeting the U.S., Europe, or the UK with its smartphone straight away, starting instead with networks closer to home. While HTC may be its role-model, it’ll be Huawei that could suffer the most, as it too supplies hardware to networks for re-branding, as well as producing its own gradually improving range of phones that wear its name.

Last time, it didn’t end well

Foxconn’s last attempt to get into the phone market didn’t end well. When ex-Texas Instruments Asia CEO Terry Cheng came in as Foxconn CEO in 2011, he clashed with the chairman of Foxconn’s parent company, Terry Gou, over the proposed development of an own-brand phone range, as he had concerns that the move would affect the company’s core business. Cheng resigned just six months into a three-year contract, citing health reasons, but some reports suggest he was forced to leave by Gou.

These concerns may be justified too. Though there doesn’t seem to be any public information on restrictions regarding manufacturing placed on Foxconn by the companies that use its services, we’d imagine they would keep very close eye on any smartphone that did emerge from Foxconn, given the access it has had to cutting-edge devices for all these years.

Digitimes’ report closes by saying Foxconn is watching Commtiva’s performance for Sharp, before making a decision whether to entrust them with its own devices. For now, it’s all speculation, but there’s a whiff of plausibility to this one.