According to people familiar with the matter, Apple Inc. partner Foxconn Technology Group plans to invest approximately $700 million in a new plant in India to ramp up local production, highlighting an accelerating shift of manufacturing away from China as Washington-Beijing tensions rise.
According to the people who asked not to be identified because the information is not public, the Taiwanese company, also known for its flagship unit Hon Hai Precision Industry Co., plans to build the plant to make iPhone parts on a 300-acre site near the airport in Bengaluru, the capital of Karnataka. According to some sources, the factory may also assemble Apple’s handsets, and Foxconn may use the site to produce parts for its nascent electric vehicle business.
China is in danger of losing its position as the top producer of consumer electronics, as evidenced by the investment, which is one of Foxconn’s largest single outlays in India to date.
With the help of their Chinese suppliers, Apple and other US businesses are looking into alternative countries like Vietnam and India. The pandemic and the conflict in Ukraine have accelerated this rethinking of the global supply chain, which could change how electronics are produced globally.
The new manufacturing facility in India will, according to the sources, generate about 100,000 jobs. Currently, the company employs about 200,000 people at its massive iPhone assembly facility in the Chinese city of Zhengzhou, though that number rises during the peak production season.
Due to Covid-related disruptions, output at Apple’s Zhengzhou plant dropped ahead of the year-end holidays, prompting the company to reconsider its China-reliant supply chain. Foxconn’s decision is the latest indication that suppliers may relocate capacity out of China far faster than expected.
The plans could still change because Foxconn is a finalising investment and project details, according to the people. It’s also unclear whether the plant represents new capacity or production that Foxconn is shifting from other locations, such as China.
Apple did not respond to a request for comment. Hon Hai’s Chairman Young Liu did not immediately respond to an email seeking comment after meeting with India’s Prime Minister Narendra Modi this week. The Karnataka state government did not respond immediately either. While on tour in India, Liu committed to another manufacturing project in the neighboring state of Telangana.
The decision by Foxconn would be a coup for Modi’s government, which sees an opportunity to close India’s technological gap with China as Western investors and corporations turn against Beijing’s crackdown on the private sector.
India has provided financial incentives to Apple suppliers such as Foxconn, which began manufacturing the latest generation of iPhones last year at a site in Tamil Nadu. Smaller rivals Wistron Corp. and Pegatron Corp. have also increased their presence in India, while suppliers such as Jabil Inc. have begun producing AirPods components locally.
