Apple Supplier Foxconn Plans $500 Million Component Plants in India

(Bloomberg) -- Apple Inc.'s main supplier, Foxconn Technology Group, plans to increase its investments to more than $1.2 billion in southern India's Karnataka state and add two component factories there, expanding a steady diversification from China to mitigate the risks of US economic and technology sanctions.

At least one of the factories that the Taiwanese company plans to construct in Karnataka will produce Apple parts, including for iPhones, people familiar with the matter said. A formal announcement is expected as early as this week, the people said, declining to be named as the matter isn't public. The second plant will also be in Karnataka, but their exact location has yet to be decided.

Foxconn is spending $500 million on these two complexes on top of a $700 million facility it aims to build on a 300-acre site close to the airport in Bengaluru, the capital of Karnataka, Bloomberg News previously reported. That plant is likely to assemble iPhones and expected to create about 100,000 jobs.

The additional sites will bring the Apple partner's envisioned new spending for India north of $1.2 billion, a big outlay for a Taiwanese company that traditionally assembles the vast majority of devices for Apple and other US brands from central and southern China.

Foxconn's moves in India highlight how the South Asian nation has fast become a popular destination for manufacturers scouting for an alternative to China amid growing tensions between Washington and Beijing. It's also the result of a shift in the global supply chain that accelerated during the Covid-19 pandemic and war in Ukraine, and could reshape the way electronics are made.

Apple didn't reply to a request for comment. Foxconn didn't respond to an email for comment. The Karnataka state government didn't respond to a request for comment outside of business hours. 

Apple suppliers such as Foxconn have ramped up business in India over the past few years thanks to Prime Minister Narendra Modi's incentives to boost local manufacturing. Foxconn and smaller Taiwanese rival Pegatron Corp. now both operate iPhone assembly facilities in the southern state of Tamil Nadu. Other states such as Karnataka have also wooed companies with quick decision-making, cutting down on red tape and throwing in subsidies.

Separately, a Foxconn subsidiary also signed an initial agreement with the southern Tamil Nadu government to set up its own components plant with an investment of 16 billion rupees ($195 million), the state's industries ministry said Monday. The project is likely to generate about 6,000 jobs.

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Foxconn's decision suggests suppliers may move capacity out of China far faster than expected and is a coup for Modi's government, which sees an opportunity to close India's tech gap with China as Western investors and corporations sour on Beijing's volatile regulations, slowing economy and US trading restrictions.

Foxconn's sprawling iPhone assembly complex in the Chinese city of Zhengzhou — currently the world's biggest source of Apple's marquee gadget — employs some 200,000, though that number surges during peak production season.

Output at the Zhengzhou plant plunged ahead of the year-end 2022 holidays due to Covid-related disruptions, one of several factors spurring Apple to re-examine its China-reliant supply chain. 

--With assistance from Debby Wu and Mark Gurman.

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