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4-Traders Homepage  >  Equities  >  TAIWAN STOCK EXCHANGE  >  Hon Hai Precision Industry Co., Ltd.    2317   TW0002317005

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Apple, supplier Foxconn to share costs on improving factories

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05/10/2012 | 09:48am CEST
Employees work inside a Foxconn factory in the township of Longhua in the southern Guangdong province in this May 26, 2010 file photo

SHANGHAI (Reuters) - Apple Inc and its key supplier Foxconn Technology Group will share the initial costs of improving labor conditions at the Chinese factories that assemble iPhones and iPads, Foxconn's top executive said on Thursday.

Foxconn chief Terry Gou did not give a figure for the costs, but the group has been spending heavily to fight a perception its vast plants in China are sweatshops with poor conditions for its million-strong labor force. It regards the criticism as unfair.

"We've discovered that this (improving factory conditions) is not a cost. It is a competitive strength," Gou told reporters on Thursday after the ground-breaking ceremony for a new China headquarters in Shanghai.

"I believe Apple sees this as a competitive strength along with us, and so we will split the initial costs."

It was unclear if the split would be 50/50 or in some other ratio.

Foxconn announced in mid-February it had raised wages for workers by 16 to 25 percent, and in late March it reached an agreement with Apple to hire tens of thousands of new workers to reduce overtime work.

Analysts have attributed weaker-than-expected first-quarter results at Foxconn's flagship listed unit Hon Hai Precision Industry Co Ltd mainly to rising salary costs.

Hon Hai has been trying to cut rising Chinese labor costs in the past two or three years, and has been relocating plants to areas of China where wages are lower.

FOCUS ON DOMESTIC CONSUMERS

Foxconn's manufacturing in China will focus on domestic consumers in the country of 1.3 billion people, as well as research and development in technology, sales and services, Gou said.

Foxconn Technology Group's other listed units include Foxconn International Holdings, the world's top contract mobile phone maker, and Foxconn Technology Co which makes casings.

Over the past two years, there has been a spate of suicides at Foxconn's sprawling plants which make the Apple products as well as gadgets for the likes of Microsoft and Nintendo.

Apple and Foxconn agreed earlier this year to improve conditions for workers assembling Apple products.

Despite Hon Hai's weak first-quarter showing, Gou said he expected the group to be able to reach its revenue growth target of 10 percent this year.

(Additional reporting by David Lin; Editing by Muralikumar Anantharaman)

By John Ruwitch

Stocks mentioned in the article
ChangeLast1st jan.
APPLE -0.25% 187.16 Delayed Quote.11.20%
FIH MOBILE LTD -4.61% 1.45 End-of-day quote.-39.33%
FOXCONN TECHNOLOGY CO LTD --End-of-day quote.
HON HAI PRECISION INDUSTRY CO., LTD. --End-of-day quote.
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Financials ( TWD)
Sales 2018 4 737 B
EBIT 2018 156 B
Net income 2018 131 B
Finance 2018 209 B
Yield 2018 4,18%
P/E ratio 2018 10,87
P/E ratio 2019 10,05
EV / Sales 2018 0,26x
EV / Sales 2019 0,24x
Capitalization 1 456 B
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 19
Average target price 98,5  TWD
Spread / Average Target 17%
EPS Revisions
Managers
NameTitle
Terry Gou Chairman & Chief Executive Officer
Te Tsai Huang Chief Financial Officer
Chao-An Chou Manager-Central Information
Jui Hsia Wan Member-Supervisory Board
Fang Ming Lu Director & Deputy General Manager
Sector and Competitors