iPhone maker plans US$700 million India plant in shift from China

Apple partner Foxconn Technology Group plans to invest about US$700 million on a new plant in India to ramp up local production, people familiar with the matter said, underscoring an accelerating shift of manufacturing away from China as Washington-Beijing tensions grow.

The Taiwanese company, formally known as Hon Hai Precision Industry, plans to build the plant to make iPhone parts on a 300-acre site close to the airport in Bangalore, the capital of the southern Indian state of Karnataka, according to the people, who asked not to be named as the information is not public. The factory may also assemble Apple’s handsets and Foxconn may also use the site to produce some parts for its nascent electric vehicle business.

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

The new production site in India is expected to create about 100,000 jobs, the people said. The company’s sprawling iPhone assembly complex in the central Chinese city of Zhengzhou employs some 200,000 at the moment, although that number surges during peak production season.

Output at the Zhengzhou plant plunged ahead of the year-end holidays due to Covid-related disruptions, spurring Apple to re-examine its China-reliant supply chain. Foxconn’s decision is the latest move that suggests suppliers may move capacity out of China far faster than expected.

The plan may herald an accelerated relocation from China for Hon Hai. Once completed, we calculate this factory could materially improve the component supply in India and potentially boost the country’s share of iPhone assembly to 10 per cent to 15 per cent from a sub-5 per cent currently.