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Foxconn Unit Adopts its Own China-Plus-One Strategy |
NEWS |
Foxconn Industrial Internet (FII) is a subsidiary company of Foxconn group and provides consulting services and digital solutions to customers across multiple industries. The company is commissioned by its customers to introduce smart manufacturing technologies such as measuring sensor information from IoT devices, deploying automated robotics, and setting up 5G networks in their facilities. The company announced in February 2022 that it is not only expanding its engagements across China but also Vietnam.
In the Asia-Pacific region manufacturers often adopt a China-plus-one strategy, with Vietnam often chosen as a second location. FII aims to helps its customers meet customer orders while managing the lingering effects of the pandemic and supply chain disruptions. In addition, the uncertain operating environment has meant many firms to hedge their risks by shifting some resources to other locations.
FII Sets its Sights on Vietnam |
IMPACT |
According to Vietnam Briefing, Foxconn invested in Vietnam US$1.5 billion in 2020 and recruited 10,000 more local workers in 2021. Vietnam is an attractive manufacturing location for several reasons including its cheap and well-educated labor force, plus the country’s participations in several free trade agreements including such as the EU-Vietnam Free Trade Agreement (EVFTA), the UK-Vietnam Free Trade Agreement (UKVFTA), and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In addition, a 5G network has been launched in the country (see IN-5855). The competitive environment that the country’s textile, apparel, and packaging sectors operate in are a good fit for FII to help these manufacturers avoid unplanned downtime, improve quality levels, optimize their operations, and win more customers.
FII helps manufacturers to optimize their operations based on digitizing data collection methods from the factory floor and performing analytics on the information utilizing the Foxconn Industrial Cloud Platform (FII Cloud). The white labeled solution was created in partnership with Tencent Cloud. Via a secure connection between the manufacturing facility and FII Cloud, customers can perform proactive system maintenance and with the benefit of AI algorithms identify cost and energy reductions and improve the performance of their production lines. FII also helps customers to adopt edge computing with its Fog Cerebellum solution. The software solution is designed to connect sensors and devices at the edge to support high-performance local data collection and processing for Computer Numerical Control (CNC) machining, robotics, assembly testing, and environmental data applications.
FII can help manufacturers to automate their operations by utilizing robots. In combination with sensors around the facility, the robots can understand their local environment and perform self-diagnosis, self-healing, self-optimization, and self-adaptation functions to improve production yields and reduce cost and waste.
Current FII customers include parts suppliers Citic Discasto and Minth Group, carmaker Guangzhou Automobile Group, and contract manufacturer Guangzhou Seagull Kitchen and Bath Products.
In addition to helping other companies, FII itself also manufactures servers, networking equipment, and components for smartphones and tablets on behalf of Alibaba Group Holding, Amazon, Apple, Google, and Tencent.
FII Showcases Smart Manufacturing Technologies at its Own Facilities |
RECOMMENDATIONS |
One of FII’s objective is to help customers be certified by the World Economic Forum (WEF) as lighthouse factories. Developed by the forum in conjunction with McKinsey, the WEF defines and certifies a facility as a lighthouse factory when it deploys smart manufacturing technologies such as robotics, data analysis, and Artificial Intelligence (AI) at scale. By investing in these technologies manufacturers can not only reduce costs and energy use but also improve manufacturing quality and production safety. As of September 2021, there are 90 such sites dotted around the globe with FII and Foxconn already having four certified lighthouse factories between them (for more information about manufacturing in China please refer to MD-MMD-101 and PT-2441).
The operations at FII’s facility in Shenzhen are controlled electronically (performing equipment monitoring, predictive maintenance, quality inspection, energy consumption, optimizing production scheduling and logistics configuration) with production lines equipped with robots; the facility is a lights out factory.
ABI Research expects lights-out style remote operation to resonate in Vietnam because production facilities have been shut due to spikes in COVID infections. FII’s sites in Vietnam, which have improved profitability despite being closed for two months in 2021, are a testament to the downstream benefits of investing in these technologies.
