Infamous Foxconn, best known for the deplorable working conditions for Chinese workers that make Apple’s iPod and other products, is intent on developing a strong presence in the solar industry.
The company first announced this decision in 2011 at the height of overcapacity in the industry. The last thing that was needed was a big new player that would bring margins down even more.
Given how much pain the solar industry has been experiencing, many expected Foxconn to pull out, but last month it announced big plans.
Foxconn says it will build a solar research center, five solar component factories, and 20 solar projects in China’s Guangxi province.
The company is based in Taiwan but its solar business will be centered in China because of huge government subsidies.
It has been operating a 100 megawatt (MW) solar panel factory in China since 2011, and says it will expand that and launch a 400 MW factory in Mexico later this year. Future plans include a plant in Europe.
Foxconn, the world’s largest contract manufacturer of electronics, is shifting its focus to solar because of increased competition, higher labor costs and pressure from business customers. Last year, the cellphone subsidiary reported a loss of $316 million.
Although margins for solar manufacturing have been cut in half over the past few years, 13% is still much better than Foxconn’s 5.6% on electronics.