iPhone Maker plans $700 million Indian factory to replace China

(Bloomberg) – Foxconn Technology Group, a partner of Apple Inc., plans to invest about $700 million in a new factory in India to ramp up local production, people familiar with the matter said, pointing to an accelerated shift of the manufacturing away from China as Washington-Beijing tensions grow.

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The Taiwanese company, also known for its flagship unit Hon Hai Precision Industry Co., plans to build the iPhone parts manufacturing plant on a 300-acre site near the airport in Bengaluru, the state capital. South Karnataka Indian, according to people, who asked not to be named because 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 fledgling electric vehicle business. Apple declined to comment.

The investment is one of Foxconn’s biggest outlays to date in India and underscores how China stands to lose its status as the world’s top producer of consumer electronics. Apple and other US brands are relying on their China-based suppliers to explore alternative destinations such as India and Vietnam. It’s an overhaul of the global supply chain that accelerated during the pandemic and the war in Ukraine and could reshape the way global electronics are made.

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

“My trip this week supported Foxconn’s efforts to deepen partnerships, meet old friends and make new ones, and seek cooperation in new areas such as semiconductor development and electric vehicles,” 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 production site in India is expected to create around 100,000 jobs, the sources said. The company’s sprawling iPhone assembly complex in the Chinese city of Zhengzhou currently employs some 200,000 people, although that number increases during the peak production season.

Production at the Zhengzhou factory plunged ahead of the holiday season due to Covid-related disruptions, prompting Apple to re-examine its China-reliant supply chain. Foxconn’s move is the latest move that suggests suppliers could move capacity out of China much faster than expected.

What Bloomberg Intelligence says

The plan could herald an accelerated relocation from China for Hon Hai. Once completed, we calculate that this plant could significantly improve India’s component supply and potentially increase the country’s iPhone assembly share to 10-15% from less than 5% currently.

— Steven Tseng and Sean Chen, analysts

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

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

The Karnataka state government also did not respond to a Bloomberg request for comment. Liu has embarked on another manufacturing project in neighboring Telangana state.

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

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

–With help from Mark Gurman.

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

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