iPhone prices to rise?

Foxconn has indicated that the cost of increased wages for its suicidal employees must be shared by its international customers, including Dell, Apple and HP.

According to the Financial Times, the manufacturer did not say precisely how the costs would be shared, but said that: “we are applying international standards now. The time has come for the global food chain to face these issues.”

Following a spate of suicides this year, Foxconn first said that it would be raising wages by 20 per cent, then later added that wages would be raised by 66 per cent for employees who met certain standards.

The move is an interesting development for a Chinese company, as the nation has been accused of artificially keeping its currency undervalued to benefit its export market. An increase in wages supported by increasing sales prices could reduce Foxconn’s chances of remaining a world-leading manufacturer.

On the other hand, any loss in business could reflect poorly on the international companies who have dealt with Foxconn in the past, and who value their stance on human rights.

With margins already narrow for most IT vendors, this development presents three possibilities.

Firstly, the Western clients could abandon any pretence at concern for human rights, which is unlikely.

Secondly, the retail costs of Chinese-made devices such as the iPhone will rise.

Thirdly, as Chinese workers increasingly demand a better standard of living – the recent period of cheap international manufacturing will come to an end.