Apple and Foxconn Continue Moving Production from China to India

Taiwan-based electronics manufacturer Foxconn, a principal supplier of components for the Apple iPhone, announced Tuesday it will purchase a large parcel of land near the Indian tech hub of Bengaluru.

The facility to be constructed in Bengaluru is evidently part of both Foxconn and Apple’s plan to diversify production away from China.

Agence France-Presse (AFP) noted the plot Foxconn is buying for about $37 million in Bengaluru (formerly known as Bangalore) is bigger than “50 Manhattan city blocks.” Foxconn subsidiary Hon Hai Technology India Mega Development is handling the purchase.

The announcement Foxconn made at the London Stock Exchange did not specify the intended purpose of the real estate, but a clue could be found in comments from Indian officials that Apple plans to begin producing large numbers of iPhones at a new plant in Karnataka state, where Bengaluru is located. Apple would need a steady supply of components from Foxconn to put those iPhones together.

The Apple plant is supposed to create 100,000 local jobs, which would make it about half the size of the gigantic Foxconn facility in Zhengzhou that became the focus of worldwide attention in November when it was placed under coronavirus lockdown. Trapped workers complained of inhumane conditions in the plant and literally climbed the fences to escape. Riots boiled through the streets outside the plant, prompting a brutal response from Chinese security forces.

China supposedly abandoned its lockdown policies two months later after massive nationwide protests, but Apple and Foxconn were among the overseas firms that decided that putting all of their eggs in the China basket was unwise. 

Foxconn initially explored shifting its supply chains to Vietnam before adding India to the mix. Vietnam is apparently still part of the plan, as Tuesday’s announcements included Foxconn buying a smaller site in the Nghe An province of Vietnam as well as the massive property in India.

Foxconn already has several plants in India and is about to break ground on yet another in Telangana state. Apple phones sell very well in India, even though they are somewhat more expensive than other popular options. In September, Apple made a public commitment to manufacture the next iPhone version in India.

Analyst Prachir Singh of Counterpoint Technology Market Research told AFP that Apple’s operations in China probably will not “come down to zero,” but the company is “building a similar world in India so they have multiple locations to rely on.”

The Deccan Herald noted on Tuesday that Foxconn seemed interested in keeping its Indian expansion plans fairly quiet until it was ready to make official filings. Only a week ago, the Taiwanese firm was saying it had not made any “binding, definitive agreements for new investments in India.”

Apple, on the other hand, has not been shy about saying it views India as a crucial element of its pivot away from Chinese manufacturing. Apple CEO Tim Cook last week described this strategy more as an effort to capture a bigger share of the booming Indian smartphone market than a plan to get away from China’s unstable business environment.

“There are a lot of people coming into the middle class and I really feel that India is at a tipping point. And the dynamism in the market. The vibrancy is unbelievable,” Cook said in an earnings call last Thursday, during which he and other Apple executives mentioned India at least 20 times.