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Foxconn Technology Group (TPE:2354), the world’s largest contract manufacturer and a key supplier to Apple (NASDAQ:AAPL), laid the groundwork for the next chapter of the company at its first ever investor conference in Taipei Tuesday as it prepares for the departure of its founder and General manager Terry Gou.

Gou announced in April that he plans to run for leadership of Taiwan’s Kuomintang (KMT) party, which favours closer ties with China. Gou says that he will depart the company after shareholders elect a new board at its annual shareholders meeting at the end of June. In preparation for Gou’s departure, Foxconn announced the creation of a “operations committee” that will give leaders of the group’s subsidiaries greater control of the company at-large (likely to prevent fiefdoms and factions from forming). Post Gou, the group will rule on major business matters with big issues before the company being put to a vote.

Many analysts believe that the two front runners for the position to be either Foxconn Chief Financial Officer Huang Chiu-lian, or factory boss Lin Cheng-hui, who runs one of Foxconn’s largest operations -- an iPhone-assembly in Zhengzhou, China.

Foxconn also announced at the investor briefing that now has the capacity to manufacture all of Apple’s iPhones outside of China, should the company request it. If trade war turns hot and Apple is forced to relocate manufacturing to avoid tariffs on US-bound iPhones, it would likely increase capacity at facilities in India and Taiwan though the company has yet to make an official announcement.

“Twenty-five percent of our production capacity is outside of China and we can help Apple respond to its needs in the US market,” Foxconn executive Young Liu is quoted as saying at the meeting.

Trying Times for Foxconn

Whoever inherits the role of Foxconn’s next chief executive will face the company’s ultimate challenge.

Foxconn is often used in the same sentence as ‘trade war threat’, but given the company’s scale and forward thinking it's probably the best-equipped contract manufacturer to deal with this changing market dynamic.

Even before Donald Trump was president Foxconn sensed that China was losing its competitive edge due to rising wages, and began preparing for a post-China manufacturing industry by moving facilities and investing in labour-saving technology as well as factory automation. In the early 2010s, Foxconn began a push into Europe opening contract manufacturing facilities in free trade zones within Central Europe. A combination of a shrinking wage gap and proximity to the customer base in Western Europe had the math making sense. Expansion into South East Asia followed shortly thereafter, as did a reshoring of facilities to Taiwan. Foxconn already saw the writing on the wall, but the tempo of these efforts picked up as tariffs came into play under Trump.

Foxconn might have the secret sauce to counter Trump's great re-ordering of the globalized economy, but it can’t do much to fight off late-stage capitalism. A contract manufacturer with the capacity to feed the big box stores' appetite for mass market devices hits an existential moment when people stop consuming like they used to.

Industry analysts forecast worldwide shipments of consumer electronics devices will be flat in 2019, with only incremental growth in the early 2020s. While there will be some growth in high-end devices, given their comparatively small volume this will remain a relative niche. 5G will also push an upgrade cycle, but consumers will be hesitant to commit to a purchase until telecoms have an extensive, nationwide network rolled out.

Although other types of devices such as wearables and smart home accessories have grown, there is simply no single new mass market device out there to replace this slump. Consumers are content with their smartphones, PCs, tablets and televisions as they are: nothing is driving a mass upgrade cycle at the moment. One of Foxconn’s trade war insurance policies was its ability to supply the China market, given its existing manufacturing and logistics infrastructure in-country, but in addition to a slowing economy China also faces the same problem as the West -- consumers don’t see the next best thing on the market and are sticking with what they have.

Investors don't like it. Foxconn, for its part, is wearing this worry on its stock price, closing at TWD 61.90 (US $1.97) not having budged much despite a plethora of Apple announcements at its recent WWDC expo that were well received by the press. In comparison, in early 2015, at the height of the sales cycle of Apple’s iPhone 6 and 6 Plus, its best selling models, Foxconn’s stock was trading at TWD 116.17 (US $3.70).