iPhone Maker Foxconn Getting into Solar Business — Solar Costs Set for Further Falls

December 30th, 2011 by Ravinder Casley Gera

In the clearest sign yet that solar energy is the ‘next big thing’ for high-tech manufacturers, Taiwanese manufacturer Foxconn — which manufactures the iPhone for Apple, as well as a host of other well-known gadgets — is getting into the solar business. The company is to open a plant in the eastern Chinese province of Jiangsu devoted to manufacturing photovoltaic modules.

This is big news, because Foxconn is the world’s biggest electronics manufacturer. As well as the iPhone, it builds the PlayStation 3, Amazon Kindle, and Nintendo Wii. It’s the second biggest exporter in China. The entry of a company of this size into the rapidly-growing solar industry is likely to significantly increase competition and, as a result, reduce prices.

“Foxconn plans to build new factories with undreamed-of scale and lower cost,” Bloomberg analyst Jenny Chase told Bloomberg Businessweek. “It will push capacity higher and prices lower.”

Prices for solar cells have already been reduced more than 60% in the last year, Businessweek points out, in part because of the entry of low-cost Chinese manufacturers into the industry. And Foxconn, whose size enables it to operate on razor-thin profit margins, is likely to significantly undercut rivals such as Suntech, currently China’s largest solar exporter. Bloomberg crunched the numbers and found that Foxconn’s profit margin in the last quarter, 5.6%, was less than a third that of Suntech. That’s because Foxconn’s sheer scale means it can shave prices to barely-profitable levels but still make a boatload of money.

Cheaper solar modules are an undoubted good thing, environment-wise. They mean cheaper solar energy installations, which means more solar installations. But this announcement could be bad news for the US solar industry, which has already been reeling from rapid reductions in solar prices — a trend encapsulated by the bankruptcy of California-based Solyndra in September.

Plus, there’s the issue of working conditions. Foxconn has been plagued by worker suicides in recent years, leading to widespread concern about its low pay and barracks-like worker accommodation.

The precise details of Foxconn’s plans are as yet unclear. The company didn’t even announce its solar project itself, preferring to leave it to the government of Funting county where the plant will be based. But it’s known that Foxconn plans to invest $30 million in the project to get started. Given that its business model revolves around scale, it’s likely that we’ll see that figure rapidly increase once production begins in May.

For more on the growth of China’s renewable energy industry, read US Wind Tower Group Files Dumping Complaint Against Chinese, Vietnamese Manufacturers.

Source: Bloomberg Businessweek / Taipei Times | Picture: Bert van Dijk on Flickr

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Tags: China, china solar energy, foxconn, taiwan

About the Author

Ravinder Casley Gera is a London-based freelance journalist passionate about climate change, development and technology. He has written for the Daily Express, Excite.co.uk, and the Fly. He blogs at ravcasleygera.wordpress.com.

http://www.facebook.com/people/Stan-Stein/1756064509 Stan Stein

Personally…..I just don’t buy anything knowingly made by Foxconn, and am very dissapointed in companies who do business with them. That means iPhones, and, as mentioned in the article, many games…they will never see one if my dollars.
Now Assange……why don’t you Wikileak THEM?
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