Apple Inc. partner Foxconn Technology Group plans to invest about $700 million on a new plant near Bengaluru, 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. According to one estimate, the investment could create as many as 100,000 jobs in the country, more than a third of all Foxconn employees.
The new facility will be built on a 300-acre site near Bengaluru, the capital of the Indian state Karnataka, and assemble iPhone handsets and parts for its nascent electric vehicle business; sources told Bloomberg. The plant will significantly increase local production and a significant shift away from China, where the company has focused on assembly for Apple products since last year.
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The Indian government has offered incentives to suppliers of electronic components, such as Apple, to boost their presence in the country. As the world’s largest consumer electronics market, India has become a potential destination for manufacturers looking to diversify their supply chains, as Apple and other companies sour on Chinese policies that hinder them.
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In addition to offering financial incentives, India is also seeking to promote manufacturing. This includes launching a new industrial policy that aims to double annual exports of goods and services by 2022 while increasing the number of companies registered in the country to 1.3 million.
Several countries in the Asia-Pacific region have already been pursuing similar strategies to attract high-tech companies, including Taiwan and Vietnam. In addition, India is trying to bolster its manufacturing industry, which has been hurt by China’s economic slowdown and its crackdown on private firms.
A new plant in India would reduce the company’s reliance on a single location, severely disrupted by worker protests and a Covid-19 outbreak that shut down the sprawling factory compound in Zhengzhou for months. The company typically employs around 200,000 workers at its iPhone-making operation in Zhengzhou, although it has been hiring far more as the holiday season approaches.
The investment in India represents the most significant expansion of Foxconn’s operations outside China, focusing mainly on assembly for Apple products. The new facility could also help Foxconn diversify into other areas, such as electric vehicles, which it has pursued as a contract assembler since 2020.
To bolster its electric vehicle business, Foxconn began promoting open standards for the sector in 2020 and joined an alliance with Fiat Chrysler Automobiles N.V. and Yulon Group to create an ecosystem that promotes collaboration.
As a result, the company seeks to expand its own electric vehicle capabilities, showcasing several prototypes, including a recreation vehicle and an electric bus. The plant in Bengaluru is a significant step toward that goal, as the company is located close to the Indian capital and airport.
Foxconn’s decision to open up new operations in India is a coup for Prime Minister Narendra Modi’s government, which has long sought to boost its manufacturing sector and close the gap with China, a source told Bloomberg. The move could also help the country reach its goal of bringing the entire industry’s value up to $300 billion by 2026.
