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Friday, June 11, 2010, 06:00 am PT (09:00 am ET)

Apple manufacturer Foxconn may relocate some Chinese factories

Facing increasing scrutiny from the media and general public over a rash of employee suicides, Apple manufacturing partner Foxconn is rumored to be plotting an exodus from mainland China sometime in the future.

The Chinese-language ON.CC broke the news (translation) earlier this week, citing sources who attended the annual shareholders meeting of parent company Hon Hai. Those claims remain largely unverified, however.

Nevertheless, the report cited Hon Hai chairman Terry Gou as saying his firm was in the midst of planning a restructuring that would uproot its mainland China operations in favor of peppering them throughout other regions in Far Eastern such as Taiwan, Vietnam, and India.

The move could reportedly affect up to 800,000 employees, including those employed at Foxconn's Shenzhen location that builds the vast majority of Apple's mobile devices and some Macs.

Foxconn has come under fire in recent weeks as reports of employee suicides over the past year continue to mount. Just before the 10th suicide last month, when a 19-year-old worker who had been with the company just 42 days jumped from a building to his death, Gou insisted to reporters that his company was not running a "sweatshop."

The matter drew enough attention to warrant a comment from Apple, which said it was "saddened and upset by the recent suicides." The iPhone maker added that it was in direct contact with Foxconn senior management and believed the company was taking this matter very seriously.

For Apple, it's not the first time that events at Foxconn have threatened to sour its squeaky clean image. In 2006, the company began conducting a thorough audit of one of Foxconn's manufacturing plants that created iPods after an in-depth media report suggested that workers at the factory were being treated unfairly and forced to operate under sweatshop-like conditions for little pay.

Apple now issues an annual audit of its overseas manufacturing partners. Last year's review found that more than half weren't paying their workers valid overtime rates. Still, Apple — and numerous other electronics manufacturers like Dell and HP — have maintained their business relationships with Foxconn, and the company is believed to be the manufacturer of the next-generation iPhone that will hit the market later this month.

At this week's shareholders meeting, Guo reportedly said he suspects the ongoing suicides may be of the copy-cat variety, fueled by media coverage and the expectation of monetary compensation for the families of the deceased. As such, he said Foxconn has suspended death benefits to deter employees from plunging to their deaths from the rooftops of its factories.

In other efforts to improve employee moral, Foxconn has reportedly instated pay raises for its employees, with media reports putting figures at anywhere between 20 and 33%. Separately, the company is said to also begin offering a 66% performance-based raise incentive, though details on how that would be calculated are scarce.

In addition to Apple's inspectors, the Chinese government recently sent approximately 200 inspectors to Foxconn's facilities, who reportedly exonerated Foxconn management for any wrongdoing in the ongoing string of suicides.