Foxconn, an iPhone manufacturer, plans a $700 million plant close to Bangalore

Foxconn Technology Group, a partner of Apple Inc., plans to invest approximately $700 million in a new plant in India to increase local production, according to people familiar with the matter, highlighting an accelerating shift of manufacturing away from China as Washington-Beijing tensions increase.
The Taiwanese company, also known for its flagship unit Hon Hai Precision Industry Co., intends to construct the facility to manufacture iPhone components on a 300-acre site close to the airport in Bengaluru, according to unnamed sources. The factory may also construct Apple’s handsets, according to some sources, and Foxconn may use the site to manufacture components for its emerging electric vehicle business.

This is one of Foxconn’s largest investments in India to date and demonstrates how China is at risk of losing its position as the world’s largest manufacturer of consumer electronics. Apple and other U.S.-based brands are pressuring their Chinese-based suppliers to investigate alternatives such as India and Vietnam. It is a rethinking of the global supply chain that has been accelerated by the pandemic and the conflict in Ukraine, and it could alter the way global electronics are manufactured.

According to the individuals, the new production facility in India is expected to generate approximately 100,000 employment. The company’s sprawling iPhone assembly facility in the Chinese city of Zhengzhou currently employs approximately 200,000 people, though this number increases during peak production season.

Due to Covid-related disruptions, production at the Zhengzhou facility plummeted before the year-end holidays, prompting Apple to reevaluate its China-reliant supply chain. Foxconn’s decision is the most recent indication that suppliers may transfer capacity out of China much more rapidly than anticipated.

Foxconn is in the process of finalising investment and project details, according to the sources, so the plans could still alter. It is also unclear whether the facility represents new capacity or production that is being shifted from other sites, such as Foxconn’s Chinese facilities.

Apple declined to comment. The chairman of Hon Hai, Young Liu, who met with Prime Minister Narendra Modi this week, did not respond promptly to an email requesting comment. The Karnataka government did not respond immediately. Liu has committed to another manufacturing initiative in Telangana while on tour in India.

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Foxconn’s decision would be a triumph for PM Modi’s government, which sees an opportunity to close India’s technology deficit with China as Western investors and corporations lose faith in Beijing’s private sector crackdowns.

India has offered financial incentives to Apple suppliers such as Foxconn, which began manufacturing iPhones of the most recent generation in Tamil Nadu last year. Lesser competitors Wistron Corp. and Pegatron Corp. have also expanded in India, while suppliers like Jabil Inc. have begun producing AirPods components locally.