* Chairman Gou says U.S. "must-go market" for Apple supplier
* Indonesia investment "a top priority" -Gou
* Sees annual revenue surge to $333 bln with 10 years
By Faith Hung
TAIPEI, Jan 27 Taiwan's Foxconn Technology
Group, the major supplier of Apple Inc's iPhones and
iPads, may build high-tech factories in the United States and
low-cost plants in Indonesia as the appeal of 'made in China'
fades into a burden.
Beset by rising costs and labour unrest in China, Chairman
Terry Gou told employees on Sunday that Foxconn is considering
diversifying away from its manufacturing heartland. The world's
largest contract maker of electronic goods has little choice if
it's to protect margins and stay ahead of peers who have adapted
the Foxconn playbook into their own success stories.
"The U.S. is a must-go market," said Gou, speaking at the
group's annual party on Sunday to mark the end of the Chinese
year. Many customers and partners have asked Foxconn to open
shop in the U.S., Gou said, with an eye on advanced
manufacturing much closer to their home base.
At the same time, Indonesia will be a top priority this year
as a potential production base with attractive costs and skills.
That would tie in with Foxconn's deal to design and market
phones in the country with BlackBerry Ltd as the
Canadian company seeks to reverse its decline in the smartphone
"Foxconn has no choice but to do it," said Danny Lee, a fund
manager of Mega Financial Holding's fund unit. "China
is no longer a manufacturing hub for companies worldwide,
especially so for the PC industry."
In the U.S., Foxconn businesses like flagship unit Hon Hai
Precision Industry Co Ltd, Foxconn Technology Co Ltd
and FIH Mobile could take advantage of
geographical proximity to open up new deals with partners like
Apple as they develop new gadgets.
"I think they're looking more closely at the U.S. in order
to move closer to some of their biggest clients.
Obama is also really pushing to return manufacturing to America
and boost employment opportunities," said Kuo Ming-Chi, an
analyst at Taipei-based KGI Securities.
Foxconn's ambitious growth plans could see it lift annual
revenue to T$10 trillion ($333 billion) a decade from now, from
T$4 trillion in 2013, Gou told employees on Sunday.
The news helped shares in Hon Hai shrug off a slide in the
broader Taiwan market. Hon Hai stocks eased 0.1 percent, while
the main index closed 1.6 percent lower.
Best known for putting together iPhones, Foxconn honed its
skills by meeting Apple's exacting standards and supply chain
rigour. It boasts a workforce of more than 1 million, and the
scale to negotiate cheaper component prices than BlackBerry
could obtain on its own.
Gou placed emphasis on Indonesia for future development. He
said the country, rather than India, will be best able to
replace China as the world's manufacturing hub in the future.
"Foxconn views as a rising market with great
potential. There's also no shortage of IT personnel there. He's
prioritizing places with the most potential for domestic market
growth, and Indonesia is at the top of that list," said KGI's
Indonesian government officials have said Hon Hai wants to
gradually invest as much as $10 billion over 5 years with local
partner Erajaya Swasembada, and Indonesia will offer the
Taiwanese firm a tax package aimed at kickstarting the plan. Hon
Hai has yet to confirm these details.