China’s days as world’s fac­tory are over, warns gi­ant Fox­conn

The Daily Telegraph - Business - - Technology Intelligen­ce - By James Tit­comb in San Fran­cisco

THE world’s big­gest electronic­s man­u­fac­turer has called time on China as the cen­tre of global pro­duc­tion, say­ing the coun­try’s days “as the world’s fac­tory are done”.

Fox­conn, the Tai­wanese gi­ant best known for as­sem­bling Ap­ple’s iPhones, said it was mov­ing more of its pro­duc­tion out­side of China amid ris­ing tar­iffs on goods made in the coun­try.

Young Liu, the com­pany’s chair­man, said that while China will be a ma­jor pro­duc­tion hub, the coun­try’s “days as the world’s fac­tory are done”.

China be­came the cen­tre of electronic­s manufactur­ing over the last two decades as enor­mous fac­to­ries and mar­kets were set up in su­perci­ties such as Shen­zhen. But ris­ing wages, the Trump ad­min­is­tra­tion’s tar­iffs on Chi­nese im­ports and the in­creas­ing im­por­tance of mar­kets such as In­dia, which charges tar­iffs on electronic­s im­ports, have led pro­duc­tion to spread out across Asia and other parts of the world.

Fox­conn, which as­sem­bles Ap­ple prod­ucts as well as other smart­phones, games con­soles and lap­tops, now re­lies on China for just 25pc of its pro­duc­tion, against 30pc a year ago. “No mat­ter if it’s In­dia, South East Asia or the Amer­i­cas, there will be a manufactur­ing ecosys­tem in each,” Mr Liu said. Fox­conn – also known as Hon Hai – re­ported a 34pc in­crease in quar­terly prof­its on the back of boom­ing de­mand for cloud com­put­ing equip­ment re­lated to more in­ter­net use dur­ing the pan­demic, and as pro­duc­tion re­cov­ered from coron­avirus-in­duced shut­downs.

Rev­enues fell slightly, with the com­pany fo­cus­ing on higher-mar­gin prod­ucts such as high-per­for­mance com­put­ing. How­ever, it said it ex­pects sales to de­cline in the com­ing months as Ap­ple de­lays the re­lease of this year’s iPhones. Ap­ple said last month that the new de­vices, ex­pected to be the first fea­tur­ing 5G tech­nol­ogy, will go on sale a few weeks later than usual.

Ap­ple is Fox­conn’s big­gest cus­tomer, and while de­mand for its de­vices have been stronger than ex­pected in re­cent months, the de­lay is likely to lead to slower sales in the third quar­ter.

The White House has in­tro­duced a se­ries of in­creas­ingly puni­tive tar­iffs on Chi­nese im­ports over the last two years, and de­manded that manufactur­ing move to the US. The tar­iffs have led man­u­fac­tur­ers to ei­ther in­crease prices or move pro­duc­tion out­side of China, although rarely to Amer­ica.

Fox­conn promised to open a $10bn (£8bn) fac­tory in Wis­con­sin in 2017 although it has scaled back plans and made slow progress. Tai­wanese mi­crochip com­pany TSMC an­nounced plans for its own fa­cil­ity in Ari­zona.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.