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A legion of robots from China could change the future of manufacturing

After at least 16 workers had committed suicide over the years at its factory in Shenzhen, Taiwanese manufacturer Foxconn (which assembles Apple products) pledged last year to supplement its 1.2 million workers in China with more than 1 million robots within three years. Foxconn chairman Terry Gou, commenting on the prospect of using robots instead people, once said, “As human beings are also animals, to manage one million animals gives me a headache.”

But if Foxconn succeeds in building an army of robots, it could not only clear Gou’s headache but bring the industrial robot industry as a whole to a tipping point, wrote research firm GaveKal in a note on Nov 28. Industrial robots are not commonly used by manufacturers, in part because the robot industry is dominated by a handful of firms who have not had an incentive to expand market share via lower prices. These are companies like Japan’s Fanuc Robotics, Zurich-based ABB Robotics, or Germany’s KuKa Robotics.

So far Foxconn has only made about 30,000 robots, according to GaveKal. The “Foxbots” are expected to be able to polish, paint and pack products. They are thought to make fewer mistakes and produce 6% more than their human counterparts. If a robot ran for 20 hours a day, it would work about three times as long as a Chinese person legally can.

But more important are reports that Foxconn is producing these machines at a cost of $20,000 to $25,000 each. At that price, they are half as much as the average industrial robot, which could cost as much as $60,000, GaveKal research analyst Yuchan Li notes.

This is technology that could “remake the competitive landscape,” Li continues, and with it all firms that produce consumer electronics. Foxconn could also become a major producer of industrial robots within a few years. Li writes:

Our point is that an industry which has promised much in recent years but failed to reach critical scale, may be getting close to a point when mass adoption becomes viable for both giant producers such as Foxconn and by extension almost everyone else who wants to compete.

One reason Foxconn may be able to keep the cost of making the robots low is the fact that it can build the robots within its own factories, says Jim McGregor, founder of the technology research firm Tirias. Still, he warns, the ultimate question is whether the Foxbots can handle assembling Apple products, which require processes more complicated than those used in heavy industry. “When you get into electronics assembly, it really comes down to can robots do it more effectively and can they do it cost effectively, and being cost effective has always been the hard part,” McGregor says.

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