Foxconn eyes new factories in US and Indonesia

Monday 27 January 2014 08.24
Foxconn facing rising costs and labour unrest in China
Foxconn facing rising costs and labour unrest in China

Taiwan's Foxconn Technology Group, the major supplier of Apple's iPhones and iPads, may build high-tech factories in the US and low-cost plants in Indonesia as the appeal of "made in China" fades into a burden.

Beset by rising costs and labour unrest in China, Chairman Terry Gou said Foxconn is considering diversifying away from its manufacturing heartland. 

The world's largest contract maker of electronic goods has little choice if it is to protect margins and stay ahead of peers who have adapted the Foxconn model into their own success stories.

"The US is a must-go market," said Gou, speaking at the group's annual party yesterday to mark the end of the Chinese year. 

Many customers and partners have asked Foxconn to open up in the US, Gou said, with an eye on advanced manufacturing much closer to their home base.

At the same time, Indonesia will be a top priority this year as a potential production base with attractive costs and skills. 

That would tie in with Foxconn's deal to design and market phones in the country with BlackBerry as the Canadian company seeks to reverse its decline in the smartphone business. 

In the US, Foxconn businesses like flagship unit Hon Hai Precision Industry, Foxconn Technology and FIH Mobile could take advantage of geographical proximity to open up new deals with partners like Apple as they develop new gadgets.

Foxconn's ambitious growth plans could see it lift annual revenue to $333 billion a decade from now, Gou told employees yesterday.

Best known for putting together iPhones, Foxconn honed its skills by meeting Apple's exacting standards and supply chain rigour. It boasts a workforce of more than 1 million, and the scale to negotiate cheaper component prices than BlackBerry could obtain on its own.

Gou placed emphasis on Indonesia for future development. He said the country, rather than India, will be best able to replace China as the world's manufacturing hub in the future.