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Foxconn eyes expanding its manufacturing in the U.S.

Apple plans on bringing back Mac manufacturing to the U.S.

By Michael Kan
December 7, 2012 06:42 AM ET

IDG News Service - Foxconn Technology Group is considering expanding its existing manufacturing operations in the U.S., in a move that could be linked with Apple's plan to bring back Mac manufacturing to the country.

Foxconn made the statement on Friday after Apple CEO Tim Cook said in interviews with NBC and Businessweek that Apple would manufacture one of its Mac lines in the U.S. 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 U.S. market.

It's unclear what kind of manufacturing operations the company already has in the U.S. 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 U.S. are higher and it will be harder for the company to recruit U.S. 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 AgreementA (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 U.S. Other experts have previously said Apple contributes about 40 to 50 percent of Foxconn's revenue.

Apple will manufacture one of its Mac lines exclusively in the U.S. by the end of 2013. Why is Apple making this move?

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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