Foxconn, which is the world’s largest technology manufacturer and service provider, recently announced its plans to reduce production in mainland China. The company’s chairman revealed that while almost 70% of its current income comes from mainland China, it aims to increase its share market outside of China in the future.
Foxconn plans to hire 100,000 more staff by 2024, and increase its annual production of assembled Apple phones in India to nearly 20 million from the current 6 million. It also plans to establish a new manufacturing facility in Karnataka, where it will produce Apple iPhones and other devices.
Additionally, Foxconn is seeking to expand its production facilities in Hyderabad, where it plans to establish a Silicon carbide manufacturing AMD packaging plant for the Indian semiconductor market. India’s low labor costs make it an attractive destination for manufacturers, and Apple has been trying to accelerate its supply chain shift to India in recent years.
Although it is not easy to create a new setup in a new location, many supply chain players believe that Apple will soon start its production in India. Apple, an American-based company, is unable to do significant production in the US due to high production costs. China has been its production base for many years, but tensions between China and the US have affected the company.
For the past few years, India has been trying to attract companies to establish their manufacturing plants in the country. Apple plans to produce most of its iPhones in India by 2025. Although the company has been manufacturing iPhones in the southern Indian state of Tamil Nadu since 2017, deciding to make their flagship module in India is a significant step as trade tensions between Beijing and Washington show no sign of letting up.
Moreover, Covid-19 has led to industrial lockouts and significant scale supply chain disruptions. As a result, companies are no longer willing to wait for policy changes in China or rely on a single sourcing destination for their needs. This trend towards “omni-sourcing” has clear beneficiaries in countries like Vietnam, India, and Mexico.
Foxconn’s plans to reduce its production in mainland China and shift its focus to India could be a significant boost for the Indian economy. With low labor costs and a growing market, India is an attractive destination for companies seeking to establish their manufacturing plants. Apple’s move to shift production to India is a crucial step in diversifying its supply chain and reducing its reliance on China.