Foxconn Technology Co Ltd (TT: 2354) Plans American Expansion- APPL & HPQ

The rise in demand for American products in technology market has lead Foxconn Technology Co Ltd (TT: 2354) to consider invest more in its manufacturing operations and it has expressed intentions of moving ahead into North America. The Taipei based tech concern largest supplier of chip sets for two of the fantastic four in the internet technology industry, Hewlett-Packard Company (NYSE:HPQ) and Apple Inc. (NASDAQ:AAPL). It currently employees a global workforce of over 1.6 million to assemble its products including servers and is majorly stationed in California and Texas.

Foxconn Technology Co Ltd (TT:2354) seeks to manufacture more at home base in USA to lock in quality conscious customers who demanded “more to be done there,” said Louis Woo, a spokesperson. “Supply chain is one of the big challenges for U.S. expansion,”. He also pointed out that moving manufacturing away from low-cost countries like China “needs to leverage high-value engineering talent”. The statement seemed like an echo of company’s founding Chairman Terry Gou’s vows to train and test the U.S. engineering talent at Asian sites before employing them at US factories.

Gou’s company makes processors chip sets for cell phones and display screen at U.S sites and employs over 1.5 million people in China. This is why its supply chain could easily exploit this proximity advantage for greater flexibility, lower delivery times and reduced transportation costs.

Yesterday, Tim Cook Chief Executive Officer of Foxconn Technology Co Ltd (TT:2354) largest client, Apple Inc., (NASDAQ:AAPL) also disclosed his company’s intention to create more jobs in the US when it shifts Mac manufacturing operations to US. In a Bloomberg Business Week interview he said that the iPhone and Mac manufacturer would invest over a $100 million to relocate production from China. He also mentioned that his company would prefer partnering in the US market over going solo on production front.

The Apple Inc. (NASDAQ:AAPL)’s iPhone that are marked “Assembled in China,” have chip sets designed by U.S. companies and manufactured at Taiwanese companies like Taiwan Semiconductor Manufacturing Co.. Its Macs, iPods and iPads are also assembled in China. Despite the fact that Woo declined to reveal any specific segment of the customer base both his and Cook’s statements shared one common denominator, i.e. moving manufacturing away from China.

Shares of Apple Inc. (NASDAQ:AAPL) were down by 2.56% to close at $533.25, Shares of Hewlett-Packard Company (NYSE:HPQ) were up by 0.80% to close at $13.94, and shares of Foxconn Technology Co Ltd (TT: 2354) were down by 1.96% to close at TWD 100.

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Published by Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.

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