Apple Supplier Foxconn To Move Production Out Of China, Plans $700M Plant In India: Report

Apple partner Foxconn plans to invest $700 million in a new plant in India to boost its local production, according to a report. Companies have been rushing to shift manufacturing out of China amid ongoing trade and geopolitical tensions between Washington and Beijing.

The Taiwanese company is planning to erect a plant on a 300-acre site near the airport in Bengaluru in the southern Indian state of Karnataka, Bloomberg reported citing people close to the development. Besides production, the facility may be used to assemble Apple's receivers as well as strengthen its electric vehicle business. The new investment is expected to create about 100,000 jobs in India, the report said.

India has offered financial incentives to prominent Apple suppliers such as Foxconn, which launched its iPhone production facility in the southern state of Tamil Nadu last year. Other Apple manufacturers, including Pegatron and Wistron, also expanded their assembly operations in India, while suppliers like Jabil began producing AirPods components locally.

Apple CEO Time Cook has repeatedly emphasized the importance of expanding business in the rapidly growing Indian market, Apple Insider reported.

According to the Bloomberg report, with increasing tech investment in India, China is in danger of losing its position as the world's largest producer of electronics. Several other American brands, including Google's Pixel, have begun shifting their production out of China to India and Vietnam.

Foxconn earlier announced setting up a new major factory in Vietnam with a $300 million investment to expand its ongoing manufacturing operations in the country. At the new factory, Apple's biggest contractor is also planning to manufacture Macbooks, besides AirPods, Apple Watches, and iPads that are already in production in Vietnam, according to South China Morning Post. The efforts are aimed at relocating the Vietnamese giant's production clamp away from mainland China in the wake of unprecedented disruptions at its key manufacturing base in 2022.

Foxconn has not responded to International Business Times' email seeking comment.

Earlier this week, Apple supplier Foxlink's factory in India was engulfed in a massive fire that caused an estimated loss of $12 million. Foxlink and Foxconn are among Apple's many supplier partners that have set up plants in India after the Cupertino-based company started assembling iPhones in the country.

The Shift in Global Supply Chain

Leading American companies began to gradually shift their manufacturing out of China in 2020-2021 to avoid the supply chain disruptions triggered in the aftermath of the Covid-19 pandemic. At least 19% of American companies cut their investment in China in 2022, while 10% moved out in 2021, according to a report by the American Chamber of Commerce in Shanghai (AmCham Shanghai).

In a recent business sentiment survey by AmCham Shanghai, a majority of participating companies said they no longer see China as a "top three investment priority." As many as 66% of the responding companies cited rising U.S.-China tensions as the top business challenge, while 65% expressed uncertainty over further foreign investment in the world's second-largest economy, as per Reuters.

"A year ago, 60% of companies said China was the top or a top 3 investment priority and this year that's fallen to 45%," Michael Hart, president of the American Chamber of Commerce in China, told Bloomberg. "China is falling in the rankings as a place for people to invest globally. It's still important but not one of the top destinations for the majority of companies."