According to a published report, Foxconn Technology Group, Apple’s prime contract manufacturer is ready to shift production out of China if becomes necessary. The revelation came in the contract manufacturer’s first-ever investor meeting and conference call.
The Wall Street Journal is reporting that Foxconn is indeed ready to shift iPhone production out of China if directed by Apple. The revelation came from the contract manufacturer’s first-ever investor meeting which was held this week. This update was, no-doubt, prompted by investor concerns regarding the pending departure of the company’s founder and Chairman, Terry Gou, who has plans to run as a candidate for the President of Taiwan at the election planned in January.
Foxconn disclosed a committee of four Board member and five senior executives which is meeting on a weekly basis to determine major corporate strategies and develop a succession plan related to Gou’s departure. According to the report, Gou will retain his board seat and remain the company’s largest shareholder.
While the investor event was aimed at outlining this plan, the WSJ report indicates much of the discussion centered on the growing trade dispute among China and the United States and associated investor concerns related to Foxconn’s positioning. Noted was that: “Chinese officials told some foreign technology companies last week that there would be consequences if they pulled out of China, The Wall Street Journal has reported.”
Supply Chain Matters has provided readers a number of updates related to Foxconn’s Apple supply network mitigation plans related to the ongoing trade war among two economic superpowers. They include an update in mid-April, highlighting that the contract manufacturer would initiate production of the latest model iPhones in India.
What was unclear, at least for now, was a separate December report by Vietnamese state media indicating that Foxconn was further considering an expansion of consumer electronics manufacturing in Vietnam in order to secure an additional manufacturing capability outside of China.
In this week’s WSJ report, Young-Way Liu, the head of the company’s Semiconductor Group is quoted as stating that Foxconn’s manufacturing capabilities outside of China is sufficient to both supply Apple and high-tech customers with products in U.S. markets. The investor presentation reportedly cited plants within Australia, Brazil, Mexico, Japan, Vietnam, among other nations, as options.
Foxconn’s Planned U.S. Manufacturing Facility
A separate published report by Nikkei and Business Network CNBC, also related to this week’s investor update, indicates that the contract manufacturer has once again changed its production strategies for the planned Wisconsin facility. The contract manufacturer reportedly now plans to produce servers, networking products and automotive central controls within the U.S. facility in addition to previously announced electronic displays.
By our lens, this is a considerable change of scope, one that perhaps now factors the possibility of either extended trade and tariff tensions related to China, or Gou’s reported presidential platform to position Taiwan to be a high-tech and consumer electronics manufacturing technology and supply network source for both China and the United States high-tech market needs.
For both dimensions, these new developments reflect growing realization that tariffs may well become the determinant for high tech supply network sourcing, and that mitigating risk will likely involve a local presence in each of these major economic areas.
Still unclear, is the overall timeline of such shifts as well as the hard dollar commitments. Apple itself remains a major influence for where all of this headed as our other influential consumer electronics, automotive, aerospace or equipment manufacturers who are now sorting out supply network sourcing strategies.
We are indeed about to witness a changed global supply network landscape.
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