Foxconn to cut jobs as costs rise

Taiwan's Foxconn Technology Group, the world's largest contract electronics manufacturer, is cutting its massive workforce, the company said, as Apple Inc faces declining revenue growth and rising wages on China's mainland.

Under its Hon Hai Precision Industry Co unit, the group employs about 1.3 million people during peak production times, making it one of the largest private employers in the world.

Special assistant to the chairman and group spokesman Louis Woo did not specify a timeframe or target for the reduction, but noted that labor costs had more than doubled since 2010, when the company faced intense media scrutiny following a number of worker suicides.

"We've basically stabilized in the last three years," Woo said. When asked if the company plans to reduce overall headcount, he responded: "Yes."

Revenue growth at the conglomerate tumbled to 1.3 percent in 2013 and only partially recovered to 6.5 percent last year after a long string of double-digit increases from 2003 to 2012.

That decade saw the firm ride an explosion of popularity in PCs, smartphones and tablets, largely driven by main client Apple, but now it is feeling the effects of falling growth and prices in the gadget markets it supplies, a trend that is expected to continue.

Growth in smartphone sales will halve this year from 26 percent in 2014, according to researcher IDC, while PC sales will contract by 3 percent.

Similarly, the average smartphone will sell for 19 percent less in 2018 than last year's US$297.

"Even if technology is improving, the price will still come down," Woo said. "We've come to accept that, our customers have come to accept that."

Automation will be key to keeping labor costs under control in the long term, Woo said, as the company pushes to have robots complete mundane tasks currently done by workers.

However, Woo said Chairman Terry Gou's goal of a million robots was "a generic concept" rather than a firm target.

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