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In this article, we’ll examine Foxconn’s latest acquisition in India, the reasons behind the expansion, and how this move will impact Apple’s iPhone production and the local economy.
Key Takeaways:
- Foxconn has acquired a 1.2 million-square-meter site in India, diversifying production away from China.
- The new site is expected to create around 100,000 jobs in the region.
- This expansion is part of Apple’s push into the Indian market, which saw domestic iPhone sales of 6.7 million in 2021.
- Foxconn is also acquiring land use rights to a site in Vietnam, further expanding its production capacity.
Foxconn’s Acquisition in India
Taiwanese electronics powerhouse Foxconn has made a bold move by purchasing a massive 1.2 million-square-meter parcel of land in Devanahalli, near Bengaluru’s airport.
The deal, worth $37 million, is a significant step for the company in diversifying its production away from China.
This acquisition signifies Foxconn’s commitment to establishing a strong presence in India, a rapidly emerging market for tech manufacturing.
The site, which spans an area equivalent to over 50 Manhattan city blocks, was announced in a statement to the London Stock Exchange.
Subsidiary Foxconn Hon Hai Technology India Mega Development is responsible for the purchase, marking a new chapter in the company’s growth and development.
Implications for Apple’s iPhone Production
As the world’s leading contract electronics manufacturer, Foxconn is a key assembler of Apple iPhones.
Both Apple and Foxconn have been eager to shift their manufacturing operations away from China due to factors such as strict Covid policies, industrial unrest, and ongoing diplomatic tensions with the United States.
The establishment of a new manufacturing facility in India will bolster Apple’s production capabilities and help meet growing demand for iPhones in the country.
Karnataka state chief minister Basavaraj S. Bommai announced in March that Apple would “soon” manufacture iPhones at the new plant, creating “about 100,000 jobs.”
Bloomberg News reported that Foxconn was planning to invest $700 million in a new factory in Karnataka, further highlighting the strategic importance of this move for both companies.
Foxconn chairman Young Liu also visited the state and met with Indian Prime Minister Narendra Modi, who has been actively encouraging foreign firms to invest in manufacturing within India.
Apple’s Growing Presence in India
Apple has been gradually increasing its presence in India, a country with a population of 1.4 billion people and the second-highest number of smartphone users in the world, trailing only China.
The California-based tech giant recently opened its first two retail stores in the country, a clear signal of its commitment to the Indian market.
Market intelligence firm International Data Corporation’s Navkendar Singh noted that Apple has already experienced “quite successful” growth in India, with domestic iPhone sales reaching 6.7 million in 2021.
He added that this growth is impressive considering that Apple consistently operates at a price range of over $500.
Apple announced last September that it would manufacture its latest iPhone 14 in India, just weeks after launching the flagship model.
The country accounted for seven percent of Apple’s iPhone production last year, according to Bloomberg, lagging behind the United States, China, Japan, and other countries.
Foxconn’s Expansion in Vietnam
In addition to the acquisition in India, Foxconn is further diversifying its production by securing land use rights to a 480,000-square-meter site in Vietnam’s Nghe An province.
This move highlights the company’s efforts to establish a strong manufacturing presence in multiple locations and reduce its dependency on China.
Foxconn’s expansion in India and Vietnam signals a strategic shift for the company, offering a more stable production environment and providing a buffer against potential disruptions in China.
Counterpoint Technology Market Research senior analyst Prachir Singh commented, “Having contingency or diversification plans helps so you are not too dependent on one region.”
While it is unlikely that the company’s operations in China will decrease to zero, establishing manufacturing facilities in India and Vietnam enables Foxconn to rely on multiple locations for production.
Conclusion
Foxconn’s acquisition of land in India and its expansion in Vietnam represents a strategic and calculated move to diversify its production capabilities and reduce reliance on China.
This development not only benefits Apple as it seeks to expand its footprint in the Indian market but also promises to create thousands of jobs and contribute to the local economies of the regions where these new facilities are being established.
As Apple continues to grow its presence in India, these investments by Foxconn will play a critical role in meeting the rising demand for iPhones and other Apple products in the country.
By expanding their manufacturing capabilities across multiple regions, both Apple and Foxconn are better equipped to navigate geopolitical tensions and potential disruptions in the global supply chain.
Ultimately, these strategic moves will strengthen their positions within the tech industry while also fostering economic development and job creation in India and Vietnam.
