Foxconn Technology Group (富士康), the world’s largest contract electronics maker, plans to equalize the number of robots and the number of its workers in China within three years to lower operating expenses as labor costs rise there, the Financial Times said on Monday.
The report said the group currently employs 10,000 robots on the production lines in China and about 1 million workers.
Foxconn, known as Hon Hai Precision Industry Co (鴻海精密) in Taiwan, produces iPhones and iPads for Apple Inc, as well as other high-tech gadgets for multinationals such as Dell Inc, Hewlett-Packard Co and Sony Corp. It is the largest employer in China.
Foxconn chairman Terry Gou (郭台銘) has already come up with an automation plan to boost the number of robots, the paper said.
Foxconn plans to use 300,000 robots next year, and the number will increase to 1 million by the end of 2013, Gou said at an event at the Shenzhen production base last week, according to people at the event, the paper said.
The newspaper said Foxconn had declined to confirm Gou’s numbers, but said it wanted its employees to move beyond basic manufacturing work.
Foxconn has been working on relocating its production facilities from Shenzhen to inland cities, such as Zhengzhou in Henan Province and Chengdu in Sichuan, where labor costs are lower.
In the Financial Times report, Dong Tao (陶冬), the chief regional economist at Credit Suisse, said wages for migrant workers in China, the backbone of Foxconn’s workforce, rose 30 percent to 40 percent last year and are expected to rise an additional 20 percent to 30 percent per year at least until 2013.
Alvin Kwock (郭彥麟), head of hardware technology research at JPMorgan, was quoted as saying Foxconn’s robotics plan was part of the automation drive among China-based manufacturers. He said it indicated the cost of labor in China was no longer lower than the cost of capital.
Kwok was quoted as saying Foxconn was a latecomer to automation, while analysts believe Guo’s automation plans were likely to be an key aspect of the inland expansion strategy.