What's Wrong With Robots Making Our iPhones?

What do you do when you’re one of the world’s largest electronics manufacturers and you’ve garnered global controversy for claims of low wages and substandard working conditions? Honhai, the Taiwanese company that owns Foxconn, decided last year it would combat all the labor concerns by building an army of one million robots. Now the robots are starting to show up for work.

The Chinese press is now reporting that Foxconn has deployed about 10,000 so-called Foxbots to factories throughout China to perform repetitive tasks without complaint. According to one report, the machines cost between $20,000 and $25,000 to manufacture—that’s about three times the annual salary of the average Foxconn factory worker—but they never get tired. “There are different versions,” reads the report. “Some appear crab-like, others act as lifts, some as pick and place robots. All appear to be capable of precise movements.” The best part about it all? Foxconn builds the robots that build the Foxconn products, like some infinite electronic Ouroboros.

The shift in strategy comes after more labor scandals than we can count. Last year, there was a rash of suicides and reports of suicide pacts being used as a collective bargaining technique. Then there was a riot involving thousands of Foxconn factory workers that ended up shutting down a plant entirely for a couple of days. And then there’s the story of Foxconn compelling student interns to work on the line.

Thankfully for Foxconn, robots don’t ask for money. Barring some Terminator-like scenario, they don’t riot, either, and they certainly don’t leap to their deaths on their own volition. And they can work for days at a time without making mistakes. So it’s no surprise that Foxconn is charging ahead with the Foxbot strategy. On top of the 10,000 robots that have been installed in the company’s factories, another 20,000 are due to go into service by the end of the year. All told, Foxconn plans to build a total of one million robots, a force comparable to the 1.2 million workers that the company already employs in China and beyond.

At first, the tasks for these machines, which the company says are as “smart” as a “3-6 year old child,” will assist existing human workers. But in the future, imagines CEO Terry Gou, they may become as smart “as an 18 year old,” potentially taking the jobs of polishers, grinders, laser markers, painters, and other jobs that have in the past proven to be dull, deadly and dangerous. As Gou explained earlier this year: "As human beings are also animals, to manage one million animals gives me a headache."

Foxconn’s experienced human employees are having trouble building the iPhone 5, so how will the new robo-army handle it? Efficiently, assuming they actually work right. But given how new these machines are, and how Apple likes to tweak the manufacturing process, that could be a big assumption. Foxconn, like China as a whole, also lags behind much of the rest of the world when it comes to manufacturing robotics. Its expertise in managing armies of low-paid human workers means little when it comes to designing, programming and working alongside an expensive and expansive robotic workforce. “Foxconn’s workers will learn how to manipulate robot software, applications and maintenance,” Gou told Economic Information Daily in January.

The prospect of a such a workforce also raises the specter of increased competition coming from the companies for which Foxconn currently builds. Once robots can assemble a computer—a dream that Steve Jobs once had, and realized, at NeXT stopping Apple and Co. from diving into the machine fray and cutting Foxconn out of the picture entirely?

Of course, as NeXT told Fortune in 1990, the emphasis on robots had measurable benefits for his fledgling computer company: The computer's circuit boards had a solder joint defect rate of only 15 to 17 parts per million, which is less than one-tenth the typical rate for the industry. And once ordered, they could be manufactured and sent out the door in 24 hours, an industry first. The system was even designed for constant optimization, with humans tasked with doing statistical analysis of defect rates to find potential snags. The vision was huge. Jobs imagined the plant could produce up to $1 billion worth of the computers a year with no more than 100 workers.

This dream is precisely why Foxconn is making such a big push for robots now. But putting aside for a moment the long-term benefits of robot workers, in the short term the costs of installing the new machines (capital) will ultimately come at the expense of human salaries (labor), a prospect that’s not exactly going to charm the company’s existing workforce in China. In the West, automation has meant something that should concern Foxconn, and continue to terrify China’s leaders: large numbers of relatively well educated factory workers ending up on the streets.

Meanwhile, that workforce is getting harder to find and to please—China’s youthful, working-age population is shrinking, and demanding more rights—which is already sending labor costs spiraling upwards, and sending Foxconn to cheaper countries (it’s considering spending $10 billion on plants in Indonesia). “There aren’t many young workers coming off the streets to fill jobs at factories,” Geoff Crothall, a spokesman for the Hong Kong-based China Labour Bulletin, told the Sydney Morning Herald. “That’s why you’re seeing factory wages going up, and factories struggling to hire trained staff.”

This is why the country’s officials, meanwhile, are increasingly touting the importance of developing skilled labor alongside intellectual property protection. And the bid for better education appears to be working. A recent report by McKinsey predicts that by 2030, China alone will account for 30 percent of the world’s new college-educated workers, while the United States will account for only 5 percent. Collectively, advanced countries including the US, Japan and much of Europe will account for only 14 percent of new, highly educated workers.

As long as consumers demand the stuff they’re producing and at ever-cheaper prices, robots are going to be an unavoidable part of Foxconn, just like everywhere else. The question is how these robots fit into a company and an economy increasingly reliant—and at turns in love with and distrustful of—automation. Who knows if the robots will get smart enough to revolt. For now, the more important question is whether their human colleagues will manage to become more skilled and better educated, but also wealthier and more humane. That’ll be a task only humans can tackle.