CC Bert van Dijk/Flickr

iPhone maker Foxconn aims to manufacture its own robots and automation equipment at a new production and R&D facility at the Central Taiwan Science Park to replace some of its human laborers.

Chairman Terry Gou has signed a letter of intent with Taichung Mayor Jason Hu outlining the company's plan to build an "intelligent robotics kingdom" in the park over the next few years, according to the Focus Taiwan news agency.

The robotics and automation facilities may generate some $4 billion in production value in the next three to five years and create about 2,000 jobs, Gou was quoted as saying.

Gou also attended a ground-breaking ceremony for a robot research facility and inaugurated a plant for automation equipment maker Foxnum Technology, part of the Foxconn group.

Earlier this year, Gou said Foxconn wants to replace some human workers with more than 1 million robots to fight surging labor costs. They will perform tasks such as spraying, welding, and assembly.

The price of labor has also led Japanese and European robot makers such as Yaskawa Electric to expand their activities in China, where industrial robots are spreading very quickly. The question is which robot makers will win the biggest market share.

"Foxconn is planning on entering the robot manufacturing business with a variety of flexible, easily trainable and low-cost assembly-line robots," says Frank Tobe of The Robot Report.

"It's a painful wakeup call to ABB, KUKA and Fanuc that their products are not flexible and easily trainable enough to be useful to Foxconn or any other new-tech electronics assembler and sub-components manufacturer."