Apple and the Foxbots (video)

Who owns the robots that put 60,000 Chinese workers out of a job?

It’s been nearly six years since Hon Hai chairman Terry Gou told workers at, of all occasions, a company dance party, that within three years he hoped to replace most of them with robots. A million robots, no less.

The story got a lot of press at the time. Hon Hai—better known by its trade name Foxconn—is the world’s largest electronics manufacturer, and Apple its most important customer. In 2011, you may recall, Apple was taking the heat for a rash of suicides at Foxconn’s iPhone factories. Replacing stressed-out workers with unstressable robots seemed like a no-brainer.

Easier said than done. Gou’s target year of 2014 came and went without a robot revolution—or any visible diminution in the armies of Chinese workers needed to assemble iPhones. The media’s interest in what it dubbed the Foxbots fell off.

Until two weeks ago. From May 21’s South China Morning Post:

Thirty-five Taiwanese companies, including Apple’s supplier Foxconn, spent a total of 4 billion yuan (HK$4.74 billion) on artificial intelligence last year, according to the Kunshan government’s publicity department.

“The Foxconn factory has reduced its employee strength from 110,000 to 50,000, thanks to the introduction of robots. It has tasted success in reduction of labour costs,” said the department’s head Xu Yulian.

I wish I had a better source for that 60,000-worker stat than a Chinese publicist’s arithmetic. Happily, there’s evidence on YouTube that supports at least part of Xu’s claim. From the summer of 2015:

Not seeing the video? Try the website.

I suppose all robots bear a familial resemblance to Liam, the iPhone disassembler Apple unveiled in late March. But I can’t help wondering if Apple had a hand in creating the machines in this video.

In late 2014 ExtremeTech reported that the robots Foxconn had built weren’t good enough for Apple. Cupertino’s specifications called for parts manufactured to a tolerance of 0.02 mm. Foxconn’s robots could only do 0.05 mm.

Here’s my question: Is some of the astonishing $15 billion Apple set aside for capital expenditures in fiscal 2016 being spent on Foxbots?

Apple has declined to say, but it wouldn’t be the first time the company had invested in a supplier’s tooling and equipment—buying the laser drills and CNC machines, for example, and installing them in factories owned by a subcontractor. As Evan Niu put it last week in a Motley Fool podcast about the contract manufacturing model Tim Cook brought to Apple: “They kind of own a lot of the stuff, and Foxconn owns the factory.”

7 Comments

  1. David Emery said:

    I can understand Apple’s argument that US factories can’t match China’s labor costs. But as this gets more automated, I wonder how strong the “must be assembled in China” arguments will be.

    1
    June 4, 2016
  2. Tom Sidla said:

    Nobody ever talks about the robotic engineers and technically skilled maintenance people that staff the robots. All highly paid.

    Bring back the ox and plow. So many farm hands were replaced by steam actuated tractors. Greedy profit chasers.

    0
    June 4, 2016

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