Foxconn may expand US manufacturing base

Michael Kan
10 December, 2012
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Foxconn Technology Group, which manufactures technology products for a number of firms, notably Apple, has confirmed it may expand its existing manufacturing operations in the US. The move could be linked with Apple’s plan to bring back Mac manufacturing to the country.

Foxconn made the statement this weekend after Apple CEO Tim Cook said in interviews with NBC and Businessweek that Apple would manufacture one of its Mac lines in the US by the end of next year.

“So we’ll literally invest over $100 million,” Cook said. “This doesn’t mean that Apple will do it ourselves, but we’ll be working with people, and we’ll be investing our money.”

Analysts said Foxconn could be involved. The Taiwan-based firm is a major supplier for Apple, helping to build its iPhone and iPad. But much of that manufacturing is done in China, where Foxconn employs 1.2 million workers and labor costs are lower.

Without elaborating, Foxconn said it was considering the expansion in order to meet the needs of it customers, and to “leverage the high-value engineering talent” available in the US market.

It’s unclear what kind of manufacturing operations the company already has in the US. An expansion in the nation, however, would face challenges, said Amy Teng, an analyst with research firm Gartner.

“From the financial perspective, I don’t see any advantage in why they (Foxconn) would assemble there, unless this is part of Apple’s plan,” she said. Labor costs in the US are higher and it will be harder for the company to recruit US workers for menial factory jobs, when compared to China.

Depending on its success, Foxconn’s expansion could simply result in a trial that later disappears, Teng said. Foxconn has previously expanded its manufacturing into Brazil and South Africa, because of benefits from government incentives and the North American Free Trade Agreement (NAFTA), she added.

Helen Qiang, an analyst with research firm IDC, said it wouldn’t surprise her if Foxconn was involved with Apple’s plan for Mac manufacturing in the US. Other experts have previously said Apple contributes about 40 to 50 percent of Foxconn’s revenue.

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