Foxconn Considering a Rotational System as part of Management Overhaul

Foxconn, a major Apple supplier, is reportedly considering implementing a rotating chief executive system as part of a significant management overhaul aimed at nurturing future talent, according to three sources briefed on the matter who spoke to Reuters. While rotating chief executives are uncommon for companies worldwide, analysts suggest that such a structure can foster teamwork, prevent entrenched leadership, and groom the next generation of talent.

The sources indicated that this plan is in response to investors' repeated calls to enhance corporate governance by separating the roles of chief executive and chairperson. Young Liu has held both roles since 2019 at Foxconn, the 50-year-old Taiwanese company known as the world's largest contract electronics manufacturer and a significant iPhone assembler. Senior Foxconn managers, whose clients include Amazon, have reportedly been discussing the rotating CEO plan for several months. However, Foxconn declined to comment on the matter.

According to two of the sources, one option under consideration is to appoint four CEOs on a rotating basis, each serving for six months at a time. However, details are still being finalized and are subject to change.

The sources also mentioned that no final decision has been made, as Foxconn management is deliberating on various aspects, including how the proposed system would function, potential candidates for rotating CEO roles, their responsibilities, and their collaboration with Liu.

The rotating CEOs would be expected to oversee Foxconn's six core businesses, excluding major listed subsidiaries such as Foxconn Interconnect Technology, FIH Mobile, and Foxconn Industrial Internet.

Implementing a rotating CEO system could potentially mark the end of a "one-man rule" at Foxconn, establishing a structure where managers take turns overseeing operations across hundreds of subsidiaries and operations in over 20 countries. Young Liu assumed the chairman and CEO roles following the retirement of billionaire founder Terry Gou in 2019. Gou, who founded the company in 1974, held both titles for most of his tenure.

In 2011, Chinese technology giant Huawei introduced a rotating CEO system, where three top executives take turns as acting CEO for six-month stints. Following reports of the potential management overhaul, shares of Foxconn, formally known as Hon Hai Precision Industry Co Ltd, dropped more than 2 per cent on Thursday morning, compared to a 0.2 per cent fall in the broader market.