SHANGHAI – Reuters has reported that Taiwan’s Foxconn Technology Group, the major supplier of Apple’s iPhones and iPads, is set to relocate their high-end manufacturing to the United States and low-end manufacturing to Indonesia. As manufacturing prices in China rises, and labor unrest increases, Foxconn is looking to diversify its supply chain.
During the technology group’s annual party last Sunday, Chairman Terry Gou told employees that “the U.S. is a must-go market.”
Gou further stated that customers and partners have previously asked when Foxconn would open shop in the U.S. to access its advanced manufacturing potential. Meanwhile, continuing its diversification away from China, Indonesia will become a priority this year due to its low costs, yet modest manufacturing skills. We have also written about the potential for India to take on some of Foxconn’s production in a piece titled “Could India Manufacture the iPad?“
Chris Devonshire-Ellis of Dezan Shira & Associates comments that “it brings home the reality that China is no longer a manufacturing or sourcing hub for global MNCs, and especially so for the IT sector. This trend will continue to grow and will affect other industries such as textiles and light manufacturing. We have already been seeing this in Vietnam and now this is spreading to other ASEAN nations. Indonesia is attractive for Foxconn due to its large labor market.”
