iPhone Maker plans $700 million factory in India in shift from China

(Bloomberg) — Apple Inc. partner Foxconn Technology Group plans to invest about $700 million in a new factory in India to ramp up local production, people familiar with the matter said, accelerating the shift of production from China to Washington-Beijing underlined growing tensions.

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The Taiwanese company, also known for its flagship Hon Hai Precision Industry Co., plans to build the factory to make iPhone parts on a 300-acre site close to the airport in Bengaluru, the capital of the South Indian state of Karnataka. to the people who have asked not to be named as the information is not public.

The factory could also assemble Apple’s handsets, some people said, and Foxconn could also use the site to produce some parts for its burgeoning electric vehicle business. Apple declined to comment.

The investment is one of Foxconn’s largest single spend in India to date and underscores how China is threatening to lose its status as the world’s largest producer of consumer electronics. Apple and other US brands are leaning on their China-based suppliers to explore alternative locations like India and Vietnam. It is a rethinking of the global supply chain that has accelerated during the pandemic and war in Ukraine and could reshape the way global electronics are made.

Hon Hai Chairman Young Liu, who met with India’s Prime Minister Narendra Modi this week, did not comment on a possible investment in Karnataka in a statement on Saturday about his visit.

“My trip this week supported Foxconn’s efforts to deepen partnerships, meet old friends and make new ones, and seek collaboration in new areas such as semiconductor and electric vehicle development,” Liu said. “Foxconn will continue to communicate with local governments to seek the most beneficial development opportunities for the company and all stakeholders.”

The new manufacturing site in India is expected to create some 100,000 jobs, the people said. The company’s sprawling iPhone assembly complex in China’s Zhengzhou city currently employs some 200,000 people, though that number rises during the peak season.

Production at the Zhengzhou factory plummeted ahead of the holiday season due to Covid-related disruptions, prompting Apple to reexamine its China-dependent supply chain. Foxconn’s decision is the latest move that suggests suppliers may move capacity out of China much faster than expected.

What Bloomberg Intelligence says

The plan could herald an accelerated move out of China for Hon Hai. Once completed, we calculated that this plant could significantly improve component supply in India and potentially increase the country’s share of iPhone assembly to 10-15% from a current sub-5%.

— Steven Tseng and Sean Chen, analysts

Several government officials, including India’s deputy technology minister, on Friday confirmed details surrounding the forthcoming plant, including that it will soon be built and will create 100,000 jobs.

Plans could still change as Foxconn finalizes investment and project details, the people said. It’s also unclear whether the plant represents new capacity, or production Foxconn is shifting from other locations, such as its Chinese facilities.

The Karnataka state government also did not respond to Bloomberg’s request for comment. Liu has committed to another production project in the neighboring state of Telangana.

Foxconn’s decision would be a coup for the Modi government, which sees an opportunity to close India’s tech gap with China as Western investors and businesses grow angry at Beijing’s crackdown on the private sector.

India has offered financial incentives to Apple suppliers such as Foxconn, which started making the latest generation of iPhones at a site in Tamil Nadu last year. Lesser rivals Wistron Corp. and Pegatron Corp. are also emerging in India, while suppliers such as Jabil Inc. have started making components for AirPods locally.

–With help from Mark Gurman.

(Updates with Hon Hai statement in fifth paragraph)

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