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Foxconn to Double Apple iPhone Capacity in China with New Factory

Taiwan computer maker plans $1.1 bil plant in Zhengzhou, Henan

Foxconn to invest $1.1 bil in Henan factoryTaiwan-based Apple supplier Foxconn plans to expand the size of its iPhone production facility in Zhengzhou, Henan province, China. The US$1.1 billion that the company plans to devote to the construction of the factory is expected to make it the largest smartphone-producing facility in the world.

The China Daily reported recently that Apple's Chinese manufacturing partner plans to double the size of its smartphone plant at Foxconn Science Park in Zhengzhou, which currently produces over 200,000 iPhones a day.

Foxconn's plans call for a $1.1 billion addition to the facility with the massive expansion expected to bring the company an additional $20 billion in sales revenue in 2012. 

Apple's primary iPhone manufacturer will increase the number of production lines to 95 and add to its over 1 million mainland China employees, 130,000 of whom work at the Zhengzhou facility. Foxconn currently employs a total of 1.2 million people and supplies electronics to a number of worldwide companies.

Recent rumors suggest that Foxconn will begin producing the next-gen iPad 3 in January, which is expected to include a display with a similar pixel density to iPhone 4 and 4S Retina Displays.

Lower Labour Costs a Major Factor in Bringing Manufacturers Inland

Zhengzhou has a large workforce, with labor costs that are about two-thirds of those in China’s wealthier coastal cities, Deputy Mayor Xue Yunwei said in an interview. That’s given Zhengzhou, the capital of the mostly rural province of Henan, an advantage luring investment from manufacturers, he said.

“You can’t find entry-level workers in Shanghai offering only 1,500 yuan ($237) of monthly salary,” Xue said in Beijing yesterday. “But we can.”

Efforts to sway companies including Foxconn, Intel Corp. and Ford Motor Co. to invest inland instead of moving production to nations such as Vietnam and Bangladesh as wages rise in China’s coastal areas may help sustain economic growth that’s averaged 10 percent in the last three decades. In addition to helping find workers, authorities are offering reduced tax rates and preferential access to land to attract companies.

“In the past 30 years, China created what might be the world’s greatest miracle by attracting global capital to its coastal cities,” Xue said. “The new story for the next few decades will be the inland story.”

Economic Growth

Zhengzhou’s economy may grow 13 percent this year and maintain a double-digit pace of expansion for the “next few years,” Xue said. The national economy may grow 9.2 percent this year and 8.5 percent in 2012, according the median of 15 economists surveyed by Bloomberg.

Foxconn, which began exporting goods from its Zhengzhou factory in August, has been a major factor for the city’s growth, Xue said. Zhengzhou’s exports and imports combined will exceed $15 billion this year, triple what it was in 2010, he said.

Foreign direct investment in the city, with a population of more than 8 million, has grown 43 percent in the first 11 months of the year, Xue said. Nationally, foreign investment gained 13 percent during the same period.

To help Foxconn, Nissan Motor Co.’s local vehicle venture, and other companies to find workers, Xue said, the Zhengzhou government has encouraged some of the more than 21 million people from Henan working in other parts of China to return to the province. The government has also organized students from 40 universities and over 100 technical-training high schools in Henan to do internships at the plants in the city, he said.