Foxconn invests in solar power in China

Facing decreasing profits in cellphone manufacturing, Foxconn is now looking toward solar energy in China with plans to build 20 solar power generating plants.

Foxconn has announced plans to build a solar power network in China encompassing new factories and plants.

According to a statement released by the Chinese Ministry of Commerce, the Taiwanese electronics manufacturer is investing in one research center, five solar-power components factories, and 20 solar-power generating plants in the southern province of Guangxi.

Foxconn since 2012 has been shifting its focus toward solar power, pouring nearly 100 billion yuan (US$16 million) in other provinces in China, where the government has provided solar manufacturers with heavy subsidies.

In the face of competition, increasing labor cost and pressure from business customers, Foxconn's cellphone subsidiary company had failed to meet market expectation and reported an annual loss of US$316 million in its fiscal 2012. Hence, to some, the moves could be seen as part of a strategic plan.

Despite last week bankruptcy filing of SunTech , China's biggest solar panel manufacturer, the outlook for the domestic market remains encouraging, according to Shen Hongwen, an analyst from CIConsulting company. Foxconn should be able to tap the expanding Chinese market by utilizing its financing power and management expertise, Shen said.

However, the biggest challenge facing the Chinese solar industry is the gap between the high market demand and the low technological level of manufacturing. As part of the company's maneuver in the solar industry, Foxconn's investment in Guangxi should be seen as a decade-long strategic plan, said Shao Zhicheng, director of Jin Yin Dao research institute, in a report by news site