Higher Labor Costs at Foxconn May Prompt Price Hikes from HP, Dell

Paul Lilly

Technology bigwigs Hewlett-Packard and Dell are keeping a watchful eye on the labor situation in China, the one in which Foxconn (Hon Hai Precision Industry Company, Ltd.) has doled out major wage increases to workers who build Apple devices in an attempt to improve much criticized working conditions, and may end up hiking prices if labor costs go up across the board.

According to Reuters , HP and Dell are already working with razer-thin profit margins, and both companies have spoken out on the matter.

"If Foxconn's labor cost go up, their product cost to us will go up," HP's Chief Executive Officer, Meg Whitman, told Reuters in an interview.

Whitman said it would affect the entire industry, not just HP, though the world's largest PC maker would still "have to decide how much do we pass on to our customers versus how much cost do we absorb."

Dell was equally non-committal when speaking with Reuters , saying it doesn't know how it all will play out in terms of costs. However, Dell Chief Financial Officer Brian Gladden did say that his company will continue to watch how it unfolds, adding that labor costs account for a "very, very small piece" of the overall cost of Dell products.

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