Foxconn eyes factories in US and Indonesia

January 28, 2014 - 5:57:22 am
TAIPEI: Taiwan’s Foxconn Technology Group, the major supplier of Apple Inc’s iPhones and iPads, may build high-tech factories in the United States 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 told employees on Sunday that Foxconn is considering diversifying away from its manufacturing heartland. The world’s largest contract maker of electronic goods has little choice if it’s to protect margins and stay ahead of peers who have adapted the Foxconn playbook into their own success stories. 

“The US is a must-go market,” said Gou, speaking at the group’s annual party to mark the end of the Chinese year. Many customers and partners have asked Foxconn to open shop 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 Ltd as the Canadian company seeks to reverse its decline in the smartphone business. 

“Foxconn has no choice but to do it,” said Danny Lee, a fund manager of Mega Financial Holding’s fund unit. “China is no longer a manufacturing hub for companies worldwide, especially so for the PC industry.”   

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

“I think they’re looking more closely at the U.S. in order to move closer to some of their biggest clients.  Obama is also really pushing to return manufacturing to America and boost employment opportunities,” said Kuo Ming-Chi, an analyst at Taipei-based KGI Securities.