Apple Supplier Foxconn Plans $500 Million Component Plants in India

Apple Inc.’s main supplier, Foxconn Technology Group, is planning to invest close to $500 million to build two component factories in India as part of a steady diversification from China.

At least one of the factories that the Taiwanese company plans to construct in the southern Karnataka state 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 is not public.

The exact location of these new plants is yet to be decided.

Apple didn’t immediately 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.

Separately, Foxconn has also signed an initial agreement with the southern Tamil Nadu government to set up a component plant with an investment of 16 billion rupees ($195 million), the state’s industries ministry said Monday. The project planned at Kancheepuram district is likely to generate about 6,000 jobs.

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. States such as Karnataka have also wooed companies with quick decision making, cutting down on red tape and throwing in subsidies.

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 the war in Ukraine, and could reshape the way electronics are made.

The new component factory plans are in addition to $700 million that Foxconn is investing to build a plant on a 300-acre site close to the airport in Bengaluru, the capital of Karnataka, Bloomberg previously reported. The plant is likely to assemble iPhones and expected to create about 100,000 jobs.

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.

Read: Biden and Modi Announce Defense, Chips Deals at White House

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.

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.