(Adds more details, background, analyst comment)
BUDAPEST/PRAGUE, Sept 22 (Reuters) - Taiwan's Foxconn
<2038.HK> plans to move its Acer <2353.TW> PC assembly plant to
Hungary from the Czech Republic, a Hungarian newspaper reported,
in a move that would send a blow to the Czechs' export-driven
economy.
Foxconn is the second-largest exporter in the Czech
Republic, and its move, reported in Hungarian business daily
Vilaggazdasag on Monday, would be a high-profile sign that the
country has transformed from a low-cost base for multinational
companies to a more expensive location that some firms leave for
cheaper territories.
Vilaggazdasag quoted Csaba Egri, who heads Acer's Hungarian
operations, as saying the assembly of Acer PCs to be sold in the
European market would be moved to Szekesfehervar, a city 60 km
southwest of Budapest.
Egri did not disclose any further details and local Acer
officials were not immediately available for comment. Foxconn
officials in the Czech Republic were also unavailable for
comment.
Hon Hai Precision Industry <2317.TW>, a unit of Foxconn,
was granted permission from the European Commission in June to
buy two manufacturing plants from electronics maker Sanmina-SCI
Corp <SANM.O>, including one at Szekesfehervar in Hungary.
It was not clear how many employees could be affected, nor
how much of Foxconn's profits were generated by its Czech Acer
business.
Foxconn is the third-largest company in the Czech Republic
by revenues after making 89.5 billion crowns ($5.44 billion) in
2007, according to the Czech Top 100, an annual listing of top
firms compiled since 1994.
The electronics manufacturer has production sites in the
central Czech towns of Pardubice and Kutna Hora, and employs
3,000 workers.
With 88.0 billion crowns in export revenues, Foxconn trails
only Volkswagen's <VOWG.DE> Czech unit Skoda Auto in exports,
and accounts for 3.5 percent of Czech goods shipped abroad last
year.
The shuffle comes as the Czech economy slows after growing
more than 6 percent annually the past three years, hurt by
falling demand in its main trade partner, the euro zone
The Czech Republic has been a prime location for foreign
investment in recent years, but wages and prices have grown,
while the crown currency has appreciated 26.2 percent against
the euro and 39.7 percent versus the dollar since European Union
entry in 2004.
An August poll of 426 manufacturing and service sector
companies in the Czech Republic found the strong crown <EURCZK=>
<CZK=> had forced nearly 30 percent of firms to consider cutting
jobs and moving operations abroad.
"I guess we will see more of such cases with many exporters
gradually losing patience (with the currency strength)," said
Pavel Sobisek, chief economist at UniCredit bank in Prague.
(Reporting by Sandor Peto and Jason Hovet; editing by Quentin
Bryar and Simon Jessop)
