Foxconn, the main supplier for Apple Inc., is planning to invest over $1.2 billion in the Indian state of Karnataka to establish two component factories. The move is part of Foxconn’s strategy to diversify its operations away from China and minimize the risks associated with US economic and technology sanctions.
Sources familiar with the matter revealed that at least one of the factories will manufacture Apple parts, including those used in iPhones. Although the exact locations for the two plants are yet to be determined, a formal announcement is expected in the coming week.
In addition to these two facilities, Foxconn is already set to build a $700 million facility on a 300-acre site near Bengaluru’s airport. This plant will likely assemble iPhones and is anticipated to generate around 100,000 job opportunities.
By investing in India, Foxconn is taking advantage of the country’s growing popularity as an alternative manufacturing destination for companies seeking to reduce their reliance on China. The global supply chain has been undergoing significant changes accelerated by factors such as the Covid-19 pandemic and the conflict in Ukraine. These shifts have prompted companies like Foxconn to reconsider their production strategies.
India’s Prime Minister, Narendra Modi, has implemented various incentives to promote local manufacturing, which has attracted Apple’s suppliers like Foxconn and Pegatron. Both companies now operate iPhone assembly facilities in the state of Tamil Nadu. Other states, including Karnataka, have also streamlined their administrative processes, simplified regulations, and offered subsidies to lure manufacturers.
Beyond the investments in Karnataka, a subsidiary of Foxconn recently signed an initial agreement with the government of Tamil Nadu to establish its own component plant with a hefty investment of $195 million, likely creating about 6,000 jobs.
Foxconn’s decision to ramp up its presence in India indicates that suppliers may accelerate the shift of their production capacity away from China sooner than expected. This development presents a valuable opportunity for the Indian government to bridge the technology gap with China, especially as Western investors and corporations face concerns over Beijing’s regulatory environment, economic slowdown, and various trade restrictions imposed by the US.
The sprawling iPhone assembly complex operated by Foxconn in Zhengzhou, China, currently serves as a major production hub for Apple. With approximately 200,000 employees, this facility experiences a surge in workforce during peak production periods. However, disruptions caused by the ongoing Covid-19 pandemic have significantly impacted output, prompting Apple to reassess its heavy reliance on China for its supply chain.
As we await further details and official announcements, Foxconn’s increased investments in India and the subsequent expansion of component factories highlight the global shift in manufacturing dynamics. With tensions between major economies impacting trade relationships and disruptions, India’s emergence as an attractive manufacturing destination is showcasing the country’s potential to reshape the electronics industry.
Disclaimer: Apple Inc., Foxconn Technology Group, and the Karnataka state government did not respond to requests for comments on this matter.
