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Friday, October 15, 2010, 08:55 pm PT (11:55 pm ET)

Foxconn looking to build $10B plant in inland China - report

Apple manufacturing partner Foxconn is planning to build a new $10 billion plant in the Chinese city of Chengdu, according to a new report.

Reuters reports that several company and government sources indicated Friday that Foxconn could invest as much as $10 billion to build the plant. The factory will be built in the city of Chengdu in Sichuan province, although sources were unable to give a timeframe for the project.

At least 20,000 workers, with half trained at the company's Longhua Shenzhen facility, would be employed at the plant initially, the report noted. By comparison, over 400,000 workers currently work at the company's flagship factory campus in Shenzhen.

Chimei Innolux, Foxconn's LCD panel subsidiary, already owns a plant in Chengdu and is waiting for government approval to upgrade to an 8.5-generation plant capable of producing larger panels, according to one source. Foxconn Chairman Terry Gou could reveal plans for the factory on a visit to the city next week, said another source.

Foxconn has been looking to continue to expand outside of its mega-factory in Shenzhen, also known as "iPod City," for some time. In June, rumors suggested that Taiwan parent company Hon Hai was looking outside of China for new operations, but the company quickly dispelled the rumors, highlighting its commitment to expand "extensively" in China. According to a July report from the New York Times, Foxconn is looking to move "hundreds of thousands of workers" inland to reduce costs.

A spate of worker suicides earlier this year at the Shenzhen plant has drawn criticism from international media, despite the company being exonerated of any wrongdoing by the Chinese government. In an effort to boost worker morale, Foxconn raised wages, cut overtime hours, and began offering more "entertainment" time.

At the time, Apple was rumored to have directly provided wage increases to workers on production lines for the iPad, but a Foxconn executive officially denied the claims.

Cutting costs could be the primary reason for building the new plant in Chengdu. A report earlier this week alleged that Foxconn is raising prices on some of its clients, including Apple, in an effort to improve fourth-quarter profits.

Apple CEO Steve Jobs has defended Foxconn in the past, denying accusations that the company is a "sweatshop."

"It's a factory, but my gosh, they have restaurants and movie theaters, but it's a factory. But they've had some suicides and attempted suicides, and they have 400,000 people there. The rate is under what the US rate is, but it's still troubling," Jobs told Kara Swisher and Walt Mossberg of the Wall Street Journal in June.

Apple has begun auditing its suppliers and issuing an extensive annual supplier responsibility report to ensure that its business partners comply with the company's required "Supplier Code of Conduct."