Foxconn Technology Group, Apple’s main supplier based in Taiwan, intends to increase investment in the development of production in the southern Indian state of Karnataka to more than $1.2 billion.
The company plans to build two factories for the production of components in the mentioned region. In this case, the firm is acting within the framework of a strategy of sustainable diversification at the expense of China. By developing production activities in India, the company intends to reduce the level of risk associated with possible sanctions from the United States in the economic and technological spheres.
The media, citing insiders, report that one of the enterprises Foxconn plans to build in Karnataka will produce components for Apple devices, including the iPhone. There is information that the company will officially announce the specialization of the new plants this week. Insiders provided details about the intentions of the main supplier of the American technology giant on the rights of anonymity since the relevant issue is currently being discussed in confidentiality.
There is no preliminary information yet about the production profile of the second enterprise, which will also be built in Karnataka. The media reports that the location of this plant has not yet been chosen.
Currently, Foxconn is actively increasing efforts to create a kind of platform for the large-scale deployment of the production process in India. Two new plants in the state of Karnataka are not the only project of the company within the framework of the implementation of the strategy of activity in this country. The firm also plans to build a factory near the airport in Bangalore. The cost of this project is about $700 million. The plant will be located on a 300-acre plot of land. Preliminary information, which has not yet been officially confirmed and was distributed by the media, says that this company will produce an iPhone. About 10 thousand jobs will be created at the new plant.
The total investment of the Taiwanese partner of the American technology giant in projects to deploy production in India exceeds more than $1.2 billion. This amount of funding is a sensitive expense item for Foxconn. Currently, the company is changing its strategy in terms of geographical location of production facilities. The firm’s previous business concept provided for the assembly of the vast majority of devices for Apple and other American brands at enterprises located in the central and southern parts of China. Now there is a process that can be described as territorial diversification of production capacities.
Foxconn’s actions are objectively conditioned by external factors and reflect the general trend in the manufacturing sector, in which companies are looking for an alternative to China as a location of enterprises against the background of tensions between Beijing and Washington, which does not yet show prospects for weakening and normalization of the situation. Against the background of the current circumstances, India has found itself in a very advantageous position, since many manufacturers intend to develop their activities here. Companies are trying to gradually reduce the degree of industrial attachment to China, fearing sanctions from Washington regarding Beijing, which could affect the economy and industry.
Also, the growing interest in India as a manufacturing territory is the result of the reformatting of the global supply chain, which was initially caused by the coronavirus pandemic, and then continued against the background of geopolitical tensions. Experts say that the current situation may change the way electronics are manufactured.
Apple suppliers, including Foxconn, have scaled their business in India over the past few years. This is due to the Government of Prime Minister Narendra Modi, which stimulated the development of the local manufacturing sector. Currently, Foxconn and smaller Taiwanese competitor Pegatron have iPhone assembly plants in the southern Indian state of Tamil Nadu. Favorable conditions for the development of production have been created in India. In this country, bureaucratic processes were minimized and at the same time, the Government provided subsidies.
A Foxconn subsidiary has also signed an initial agreement with the Government of Tamil Nadu to build a component manufacturing plant. The cost of this project is $195 million. About 6 thousand jobs will be created at the new enterprise. The relevant information on Monday, July 31, was reported by the Ministry of Industry of the state.
According to experts, Foxconn’s actions mean that suppliers can withdraw capacity from China earlier than expected. For New Delhi, this is a chance to narrow the technological gap with Beijing.
As we have reported earlier, Apple Partner Foxconn to Invest $500 Million in India’s Telangana.
