|Sami Ghanmi |||May 22, 2016 10:35 AM EDT|
(Photo : VCG/VCG via Getty Images) Employess work at Foxconn demonstration plant on July 10, 2014 in Guiyang, Guizhou province of China.
Taiwanese manufacturing company Foxconn Technology Group reportedly plans to establish a new manufacturing facility in the province of Guizhou located in southwest China. The facility is expected to serve Chinese tech giant Huawei in the production of new smartphones, according to a new report.
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Citing sources familiar with the matter, Nikkei Asia Review reported that the new "assembly facility" will help Huawei to expand its smartphone business and take advantage of the current state of the Chinese market.
Huawei's rotating Chief Executive Officer, Eric Xu, announced in April the company's aim to become the largest smartphone brand in the local market hopefully in five years. He said they are looking to outperform foreign rivals in the business as it establishes a firmer foothold in the international scene.
This year, Huawei plans to ship about 140 million smartphones in which 44 percent of them will be mid-end and high-end devices. Furthermore, it is expecting its Consumer Business Group (Carrier, Enterprise, and Consumer) alone to reach revenues of $30 billion in 2016, and $40 billion in 2018, as compared to last year's $19.9 billion. As for the international scene, in order for Huawei to prosper, industry analysts say the Chinese company must succeed in the second largest market for handsets, which is the United States.
Meanwhile, Foxconn, also known as Hon Hai Precision Industry Co., Ltd, will continue to benefit from the region's cheap labor costs. The Taiwanese company has been boosting its operations in the region for quite some time now, opening a number of new data centers since 2014. In 2015, it also launched a free Wi-Fi service in Guizhou that will later expand to public areas in the capital in the next three years. In addition to Huawei, Foxconn's other major clients include both Chinese and foreign companies, such as Xiaomi, Oppo, Apple, Blackberry, Microsoft, Google, Cisco, Acer, and Nintendo, among many others.
Guizhou is located in the southwestern part of China and its capital city is Guiyang. It is said that one of the reasons why this province was chosen for Huawei's new facility is due to it being the birth place of the company's Founder and President, Ren Zhengfei.
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