iPhone Maker Plans $700 Million Indian Factory to Shift From China

(Bloomberg) — Foxconn Technology Group, a partner of Apple Inc., plans to , to invest about $700 million in a new factory in India to boost domestic production, people familiar with the matter said, underlining the accelerating shift of manufacturing away from China such as Washington and Beijing. Tensions grow.

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The Taiwanese company, also known by its parent unit Hon Hai Precision Industry Co. , to build a factory to manufacture iPhone parts on a 300-acre site near the airport in Bengaluru, the capital of the southern Indian state of Karnataka, according to people who asked not to be named because the information is not public.

Some people have said the factory may also assemble Apple phones, and Foxconn may also use the site to produce some parts for its fledgling electric vehicle business. Apple declined to comment.

The investment is one of Foxconn’s largest single expenditures to date in India and underscores how China is at risk of losing its position as the world’s largest producer of consumer electronics. Apple and other US brands rely on their suppliers in China to explore alternative locations such as India and Vietnam. It is the rethinking of the global supply chain that has accelerated during the pandemic and the war in Ukraine and could reshape the way global electronics are made.

Hon Hai President Yong Liu, who met Indian Prime Minister Narendra Modi this week, did not comment on a possible investment in Karnataka in a statement on Saturday outlining his visit.

“My trip this week has supported Foxconn’s efforts to deepen partnerships, get to know old friends, make new ones, and seek cooperation in new areas such as semiconductor development and electric vehicles,” Liu said. “Foxconn will continue to engage with local governments to seek development opportunities that are most beneficial to the company and all stakeholders.”

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People said that the new production site in India is expected to create about 100,000 jobs. The company’s sprawling iPhone assembly complex in Zhengzhou, China, employs about 200,000 at the moment, though that number climbs during peak production season.

Production at the Zhengzhou factory fell ahead of the year-end holidays 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 may herald a speedy transfer from China to Hon Hai. Once complete, we calculate that this plant could materially improve component supply in India and potentially boost the country’s share of iPhone assembly to 10-15% from less than 5% currently.

Stephen Zeng and Shawn Chen, analysts

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

People said the plans could still be changed because Foxconn was in the process of finalizing the investment and project details. It’s also unclear if the plant represents new production capacity, or production that Foxconn is diverting 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 manufacturing project in the neighboring state of Telangana.

Foxconn’s decision would be a coup for the Modi government, which sees an opportunity to bridge the technology gap between India and China, as Western investors and companies feel weary of Beijing’s crackdown on the private sector.

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

— with assistance from Mark Gorman.

(Updates with Hon Hai’s statement in the fifth paragraph)

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