Foxconn wants to start smartphone and tablet production in the US
Foxconn is actively looking into the possibility of setting up factories for high-end smartphone and tablet production in the US, as part of the next phase of its development. The Hon Hai Group Chairman and President Terry Gou admitted as much to Asian press. Foxconn is the trading name for Hon Hai Precision Industry, the company that makes a lot of the mobile devices we know and love (most notably Apple’s stuff).
Such a move would seem illogical at first. For many years, certain developing markets in Asia have been regarded as the best for manufacturing. But growing wages in China coupled with a strengthening of the yuan have meant that recently the costs for the Taiwan-based Foxconn are growing in that area.
The company wants to look to the US in part because of the Obama administration’s focus on ‘bringing back manufacturing jobs’ to the country, but also because of the highly skilled workforce it could find over there. The continuously growing wages and lack of skilled workers are the two main problems it’s identified in Asia. And the even bigger wages that American workers will demand could be offset by using highly automated production tools – thus achieving the same production numbers as in China with much fewer workers employed. Furthermore, stuff made in the USA and sold there would not have any costs associated with imports.
Foxconn wants to open two different headquarters in the US, one on the West Coast and the other on the East Coast. These should be tasked with locating suitable places for the factories. Because of the higher costs of operation implied, only high-end devices would be made in the USA, with lower-cost offerings being confined to China for now.
This isn’t the first company feeling the pressure of growing wages in China. Samsung’s main focus in Asia recently (aside from its home of Korea) has been Vietnam, presumably also because of rising costs in China.
Terry Gou thinks that his company can bring the manufacturing capabilities that the US now craves, while also reducing unemployment of American talent. Arizona Governor Janice Brewer met with Gou to discuss a possible factory in her state.
Gou thinks that there are too many software developers in the US (especially on the West Coast), compared to hardware designers, and his company’s investments will help make things more balanced from this point of view. And he seems to think that innovation is more likely to come from the United States than Taiwan.
So your next iPhone could ship with “Made in the USA” written right below the now-famous “Designed in California” label.