Foxconn, however, will also be taking on the "inventory risk" – the problem of being left with handsets that customers don't want and which it cannot sell.
BlackBerry has successively written down $934m and $1.6bn on unsold inventory of handsets and other inventory, mostly of BB10 handsets.
For Foxconn the five-year deal, announced by Chen on Friday, will give it the chance to design BB10 handsets aimed at markets in southeast Asia – the third-largest business segment by revenue for BlackBerry after the Europe, Mideast-Africa and North American segments.
It plans to sell 40m handsets in 2014, and Lei has set a goal of 100m by 2015.
Last week BlackBerry announced that it was effectively giving up making handsets as sales of its new BB10 models disappointed for the third quarter in a row, posting a $4.4bn quarterly net loss on revenues that had plunged 56% to $1.2bn.
Xiaomi sells its cheaper RedMi handsets for $130 unlocked, and its higher quality Mi3 for $330, undercutting similar handsets from Apple and Samsung.
Not many ordinary people have smartphones but they do have handsets that double as radios.
It already outsells Apple in China, and the size of its domestic market means two of its handsets – RedMI and Mi3 – were among the world's top 10 bestselling smartphones in April, said Hong Kong-based Counterpoint Technology Market Research.
We are not in the business of only making handsets," said Hugo Barra, vice-president of international operations for Xioami and a former Google Android executive.
The novelty went beyond price: Free allows free phone calls to over 100 countries and does not lock users into long-term contracts by throwing in subsidised handsets that take ages to amortise.In two and a half years, Free has picked up 13% of the mobile market.
But the iPhone is facing much stiffer competition from handsets using Google's popular Android operating system.
