Coronavirus pandemic and US-China trade war are making Apple move to India; iPhone maker Foxconn to invest $1billion in Chennai, India plant
Apple is forcing Foxconn to move its iPhone making factory out of China to India. Rising United States-China tensions and the dreaded coronavirus pandemic played a key role in Apple’s decision to move out of China according to Reuters. The move was also exacerbated by the new security law enacted in Hong Kong muzzling free speech and imprisoning Hong Kong protestors for life.
Apple plans to shift it’s key iPhone production facilities out of China and Foxconn is one of the top iPhone spares manufacturers. By making Foxconn move out of China, Apple can reduce its dependence on the country. Reuters has reported that there is a strong request from Apple to its clients to move part of the iPhone production out of China.
Taiwan based Foxconn already has two plants in India, one in Tamil Nadu and one in Andhra Pradesh where it assembles Apple and Xiaomi smartphones. Foxconn currently makes iPhone XR models in the Sriperumbudur plant. It is learned that Foxconn will be investing $1 billion in this plant over three years and look to produce all iPhone models.
According to Reuters, the Foxconn investment could add 6,000 new jobs at Sriperumbudur and enable it to be made into “export hub.”
Foxconn has many advantages of shifting to India. Cheap labor, spare parts availability, and a ready market of nearly 1.3 billion could be to Apple’s advantage. “With India’s labor cheaper compared with China, and the gradual expansion of its supplier base here, Apple will be able to use the country as an export hub,” Neil Shah of Hong Kong-based tech researcher Counterpoint said.
The Indian government is welcoming such investment in India. The government has already put in place a new production-linked incentive (PLI) scheme. The PLI for Large Scale Electronics Manufacturing proposes a financial incentive to boost domestic manufacturing and attract large investments in the electronics value chain including mobile phones, electronic components including Assembly, Testing, Marking, and Packaging (ATMP) units. Production Linked Incentives of up to INR 40,951 crores will be awarded over a period of 5 years and Foxconn was reportedly among the companies which had applied to the government for receiving the benefits from the scheme.
In addition to shifting production to India, Apple is also marketing iPhones and MacBooks heavily in India. It will open the new online Apple Store in the third quarter of 2020. It will also be opening its first physical retail store in Mumbai by end of 2020.