Even Foxconn says it's looking to move away from China

Posted:
in iPhone edited March 2023
Apple supplier Foxconn reports that it is working to reduce its reliance on its parent firm's home country of China, and will diversify future production.

A Foxconn facility
A Foxconn facility


Foxconn, which is Apple's major supplier for the iPhone, is based in Taiwan. In announcing its latest Q4 earnings that showed a drop in profits, the firm says it is working to expand away from China.

According to the Wall Street Journal, Foxconn says that currently 70% of its revenue comes from China. However, Chairman Young Liu, said the proportion of revenue from outside the country will continue to grow.

US technology firms are working to leave China in part to end their over-reliance on a single country, especially one that implements intermittent power cuts. They are also looking to move because of continued US/China trade tensions.

In the case of Foxconn, however, chair Young Liu says diversifying is a pragmatic and predictable necessity.

"It is a basic truth that labor-intensive industries transfer to low GDP countries," he said.

The Wall Street Journal says that during Foxconn's Q4 earnings call, Liu explained further that growing economies with labor-intensive industries will periodically see transfers of work. He reportedly described how manufacturing moved from the US to Japan, then to Taiwan, and most recently on to mainland China.

"These high GDP countries must upgrade their industries in order to support the sustainable development of a high GDP society," he continued.

Separately, Foxconn has already announced a $700 million iPhone production plant will be built in India, and is spending $300 million on leases in Vietnam. However, it is also continuing to expand in China.

Read on AppleInsider
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Comments

  • Reply 1 of 45
    lkrupplkrupp Posts: 10,557member
    How can Foxconn do that without Xi Jinping’s and the CCP’s permission?
    9secondkox2watto_cobra
  • Reply 2 of 45
    blastdoorblastdoor Posts: 3,580member
    Guys -- Hon Hai is Taiwanese. Foxconn is just the English name for the same firm. 

    All you have to do is read the Wikipedia entry:

    https://en.wikipedia.org/wiki/Foxconn

    Honestly, I don't even know where you got the idea that Hon Hai is CCP-Chinese. I've never seen anybody say that. Maybe lay off the gummies?
    tenthousandthingsaaplfanboydk49viclauyycelijahgWhiskeyAPPLEciderwatto_cobra
  • Reply 3 of 45
    blastdoorblastdoor Posts: 3,580member
    lkrupp said:
    How can Foxconn do that without Xi Jinping’s and the CCP’s permission?
    Because Foxconn is a Taiwanese company. AI screwed up. 
    tenthousandthingsmuthuk_vanalingamelijahgwatto_cobra
  • Reply 4 of 45
    longfanglongfang Posts: 518member
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    Pot, kettle, black.
    watto_cobraspheric
  • Reply 5 of 45
    danoxdanox Posts: 3,421member
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    Tradition….
  • Reply 6 of 45
    avon b7avon b7 Posts: 8,026member
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    The answer to that question was made clear in the article. Manufacturing tends to move to where it is cheaper. 

    The richer or more developed the country the higher the tendency to move manufacturing out. 

    The UK transformed into a services based industry in the 90's.

    If manufacturing moved away for mostly economic reasons, the only easy way to get it back is through state subsidies. And even then there are many reasons it might not pay off. TSMC does not think it's US fabs will be very profitable and may even negatively impact its wider manufacturing interests but that is geopolitics, not economics. 
    FileMakerFellerspheric
  • Reply 7 of 45
    coolfactorcoolfactor Posts: 2,339member
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...

    What makes the US and Canada better than China? We are all humans and we all share a planet... a globe ... and the tech industry is now a global effort.

    The quotes in the article explain why it's more cost-effective to have large-scale manufacturing and assembly in China and other lower-GDP countries. Trust me, I wish North America was up to the task, but our workforce is way, way, way too expensive (and lazy)!
  • Reply 8 of 45
    chadbagchadbag Posts: 2,028member
    avon b7 said:
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    The answer to that question was made clear in the article. Manufacturing tends to move to where it is cheaper. 


    I read somewhere once that a manufacturing dollar is approximately the same everywhere in the world.  I wish I could find the link but it was well over a decade ago. 

     Their claim was that while cheaper labor exists in the third world, the productivity of that labor was commensurate with the cost.  A worker in the US that is paid $50/hour (and given commensurate manufacturing tech) can produce as much in one hour as a worker paid $5/hour can in 10 hours.  They gave lots of examples and reasons.  The basic premise is that the higher paying economies support higher levels of education and technological advances and these make the workers more productive.  One thing they did in their comparisons , though, was factor out the political costs imposed — regulation, taxes, etc.   they were comparing the raw costs of productivity around the world before political costs like regulations and taxes were added. 

    FileMakerFeller
  • Reply 9 of 45
    waveparticlewaveparticle Posts: 1,497member
    chadbag said:
    avon b7 said:
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    The answer to that question was made clear in the article. Manufacturing tends to move to where it is cheaper. 


    I read somewhere once that a manufacturing dollar is approximately the same everywhere in the world.  I wish I could find the link but it was well over a decade ago. 

     Their claim was that while cheaper labor exists in the third world, the productivity of that labor was commensurate with the cost.  A worker in the US that is paid $50/hour (and given commensurate manufacturing tech) can produce as much in one hour as a worker paid $5/hour can in 10 hours.  They gave lots of examples and reasons.  The basic premise is that the higher paying economies support higher levels of education and technological advances and these make the workers more productive.  One thing they did in their comparisons , though, was factor out the political costs imposed — regulation, taxes, etc.   they were comparing the raw costs of productivity around the world before political costs like regulations and taxes were added. 

    Too ignorant about manufacturing especially high tech products. iPhones require hundreds of components supplied by different suppliers scattered away from each other. The cost of bring all the components together for Foxconn workers to assemble into an iPhone is far more than the workers pay. 
    muthuk_vanalingamspheric
  • Reply 10 of 45
    waveparticlewaveparticle Posts: 1,497member
    avon b7 said:
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    The answer to that question was made clear in the article. Manufacturing tends to move to where it is cheaper. 

    The richer or more developed the country the higher the tendency to move manufacturing out. 

    The UK transformed into a services based industry in the 90's.

    If manufacturing moved away for mostly economic reasons, the only easy way to get it back is through state subsidies. And even then there are many reasons it might not pay off. TSMC does not think its US fabs will be very profitable and may even negatively impact its wider manufacturing interests but that is geopolitics, not economics. 
    I might add that increasing the cost will produce inflation. US government might think it can keep printing money to mitigate the rising cost of living. But the distribution of money now favors the military industrial complex because of the astronomical defense budget. They may care little of higher prices. But what about the low income workers, the poor people and retired senior citizen with little savings? 
  • Reply 11 of 45
    genovellegenovelle Posts: 1,481member
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    Because as the article states, the majority of global production transfers to low GDP countries because their labor market supports it. You think the 8% of inflation last year was painful? The cost of goods would double if not triple of our labor market was used to build these things.  
    spheric
  • Reply 12 of 45
    blastdoorblastdoor Posts: 3,580member
    chadbag said:
    avon b7 said:
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...
    The answer to that question was made clear in the article. Manufacturing tends to move to where it is cheaper. 


    I read somewhere once that a manufacturing dollar is approximately the same everywhere in the world.  I wish I could find the link but it was well over a decade ago. 

     Their claim was that while cheaper labor exists in the third world, the productivity of that labor was commensurate with the cost.  A worker in the US that is paid $50/hour (and given commensurate manufacturing tech) can produce as much in one hour as a worker paid $5/hour can in 10 hours.  They gave lots of examples and reasons.  The basic premise is that the higher paying economies support higher levels of education and technological advances and these make the workers more productive.  One thing they did in their comparisons , though, was factor out the political costs imposed — regulation, taxes, etc.   they were comparing the raw costs of productivity around the world before political costs like regulations and taxes were added. 

    Well... *in equilibrium* and in a *perfectly competitive market*, the marginal cost of manufacturing (or anything else) ought to be the same everywhere, in theory. 

    But we are almost never in equilibrium (at best, we are moving towards equilibrium, but it's a moving target) and goodness knows it's not a perfectly competitive market. 

    That doesn't mean there isn't some insight to be had from the point, though. People who say it's "impossible" to manufacture iPhones in North America, or that it would be crazy expensive / inflationary to do so, are almost certainly wrong. But wrong only because 'impossible' is too strong a word. It's possible. But there's an opportunity cost. Right now the US has an unemployment rate of less than 4%. To move the assembly of 100s of millions of iPhones (or anything else at very large scale) to the US (or any other country) would mean that some fraction of employed people would need to move from their current jobs into iPhone assembly. And so the question is -- does that really make sense? What jobs would we want to give up in order to have iPhone jobs? Would that be good for workers, consumers, and the economy? I don't know the answer, but that's the question that would need to be answered. 

    My guess -- it doesn't make sense to move iPhone assembly to the US. But it might make sense to move them to Mexico. 

    The jobs that probably do make sense to move to the US are in microprocessor manufacturing, and the CHIPS act is trying to do that. It probably also makes sense to start building more nuclear submarines in the US. Let's put it this way -- I'd rather American workers be building apple silicon and nuclear subs than assembling iPhones. 
    FileMakerFellerspheric
  • Reply 13 of 45
    LeoMCLeoMC Posts: 102member
    blastdoor said:
    lkrupp said:
    How can Foxconn do that without Xi Jinping’s and the CCP’s permission?
    Because Foxconn is a Taiwanese company. AI screwed up. 
    Last I checked, Taiwan was a province in China, so every single Taiwanese company is also Chinese.
    Just like Apple is both a Californian and a US company.
    9secondkox2
  • Reply 14 of 45
    LeoMC said:
    blastdoor said:
    lkrupp said:
    How can Foxconn do that without Xi Jinping’s and the CCP’s permission?
    Because Foxconn is a Taiwanese company. AI screwed up. 
    Last I checked, Taiwan was a province in China, so every single Taiwanese company is also Chinese.
    Just like Apple is both a Californian and a US company.
    Not true. Do you get it from ChatGPT? The fact is due to a civil war, Taiwan was separated from mainland China since 1949. Independently governed. 
    9secondkox2FileMakerFellerelijahg
  • Reply 15 of 45
    https://www.cnbc.com/2023/03/15/samsung-to-spend-228-billion-on-the-worlds-largest-chip-facility.html

    South Korea’s government aims to connect chip facilities in the area from Samsung to other companies to create a “semiconductor mega cluster.” The idea is to link up various parts of the semiconductor supply chain from chip design to manufacturing.

    “In selecting the new locations, we’ve taken into consideration the synergy effect that could be seen from existing semiconductor clusters,” Lee Chang-yang, South Korea’s trade, industry and energy minister, said.

    The South Korean government said that companies will build five chip manufacturing facilities in the cluster.

  • Reply 16 of 45
    LeoMCLeoMC Posts: 102member
    LeoMC said:
    blastdoor said:
    lkrupp said:
    How can Foxconn do that without Xi Jinping’s and the CCP’s permission?
    Because Foxconn is a Taiwanese company. AI screwed up. 
    Last I checked, Taiwan was a province in China, so every single Taiwanese company is also Chinese.
    Just like Apple is both a Californian and a US company.
    Not true. Do you get it from ChatGPT? The fact is due to a civil war, Taiwan was separated from mainland China since 1949. Independently governed. 
    I'll let your rudeness slide this time.
    Taiwan was never separated from China, it was just a place where the losing party was allowed to settle, having some autonomy but inside the Chinese state.
    9secondkox2
  • Reply 17 of 45
    9secondkox29secondkox2 Posts: 3,141member
    Foxconn is a strange one as is Hon Hai. Seemingly started in Taiwan and headquartered there, but most of its revenue is from China and it’s investing in Chinese competitors. Something a Taiwanese company wouldn’t do. Labor practices, even operating in another country, also don’t seem consistent with a Taiwanese leadership. 

    Interesting. 
    edited March 2023
  • Reply 18 of 45
    9secondkox29secondkox2 Posts: 3,141member
    LeoMC said:
    LeoMC said:
    blastdoor said:
    lkrupp said:
    How can Foxconn do that without Xi Jinping’s and the CCP’s permission?
    Because Foxconn is a Taiwanese company. AI screwed up. 
    Last I checked, Taiwan was a province in China, so every single Taiwanese company is also Chinese.
    Just like Apple is both a Californian and a US company.
    Not true. Do you get it from ChatGPT? The fact is due to a civil war, Taiwan was separated from mainland China since 1949. Independently governed. 
    I'll let your rudeness slide this time.
    Taiwan was never separated from China, it was just a place where the losing party was allowed to settle, having some autonomy but inside the Chinese state.
    bruh. Taiwan is a sovereign nation. Get over it. 
    blastdoorelijahg
  • Reply 19 of 45
    9secondkox29secondkox2 Posts: 3,141member
    https://www.cnbc.com/2023/03/15/samsung-to-spend-228-billion-on-the-worlds-largest-chip-facility.html

    South Korea’s government aims to connect chip facilities in the area from Samsung to other companies to create a “semiconductor mega cluster.” The idea is to link up various parts of the semiconductor supply chain from chip design to manufacturing.

    “In selecting the new locations, we’ve taken into consideration the synergy effect that could be seen from existing semiconductor clusters,” Lee Chang-yang, South Korea’s trade, industry and energy minister, said.

    The South Korean government said that companies will build five chip manufacturing facilities in the cluster.

    Not a bad idea, though no guarantees it actually helps anything, if Metas complete waste of billions is anything to go by. 

    Arizona would be a great place for Apple and TSMC to do something similar. Recently visited AZ and drove by the future site only to discover it was just an old office building tucked back in a business park. Strange. Difficult to get there too as the streets were being heavily worked on. Traffic nightmare. 

    Lots of open land to build out a design/manufacture/transport ring. 

  • Reply 20 of 45
    9secondkox29secondkox2 Posts: 3,141member
    BiC said:
    Here is where I am bamboozled:  Why is manufacturing NOT in North America (America/Canada) - it should be law.  There goes all the talk about human rights - the hypocrisy is on another level...

    What makes the US and Canada better than China? We are all humans and we all share a planet... a globe ... and the tech industry is now a global effort.

    The quotes in the article explain why it's more cost-effective to have large-scale manufacturing and assembly in China and other lower-GDP countries. Trust me, I wish North America was up to the task, but our workforce is way, way, way too expensive (and lazy)!
    Well… Canada is fast losing its appeal thanks to its prone minister becoming Stalin. 

    So I’ll speak for the USA. 

    The difference is in how we treat people and the freedoms we have, which carry into all aspects of life, politics, and business.  

    It’s pretty simple math. 


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