A Foxconn facility
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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.
Foxconn, which is Apple's major supplier for the iPhone, is based in Taiwan. But it is owned by Chinese firm Hon Hai Precision Industry Co. 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.
