Foxconn’s Grand Vision: Expanding Horizons in India

Global earnings of Foxconn, the world’s largest contract producer of electronic devices: $198 billion in 2023. The likelihood is extraordinarily high that the newest six-figure iPhone or even the soon-to-be-released Google Pixel, enhancing your style quotient, might be enabled by a Foxconn production line. Yet, the narrative began quite humbly in India, 18 years prior. Recently, as India progresses up the ladder of affordability and style, the Taiwanese giant is investing billions to broaden its manufacturing presence in the nation. The enhancement of existing facilities and product offerings, the establishment of new greenfield operations, and partnerships with other Indian corporations that permit entry into emerging sectors signify Foxconn’s dominant theme in India’s gadget production.

In 2006, Foxconn commenced operations in Chennai to produce goods for Nokia, then the frontrunner in mobile devices in a nation on the brink of a data evolution. For ten years, its presence was relatively subdued. A significant milestone occurred in 2017 when the firm initiated iPhone production in Sriperumbudur, a special economic zone (SEZ) near Chennai. Since that time, it has played a key role in the electronics manufacturing surge in India — fueled by unquenchable demand from Apple.

China plus one

With Apple aiming to reduce its dependence on China, India has greatly benefited. Foxconn has significantly increased its investments in mobile assembly within India, and this trend is set to intensify as Apple’s focus on India intensifies.

However, Foxconn’s growth is not confined to merely smartphone assembly. The enterprise is also constructing a large facility in Bengaluru and has recently established a modern unit near Hyderabad that is anticipated to begin AirPods production shortly. The company’s semiconductor aspirations appear to be taking flight with its pledge to invest $37.2 million in collaboration with IT giant HCL to set up a chip packaging and testing facility in India. This announcement followed the collapse of its joint venture with the Vedanta Group.

All of these developments indicate the company’s ambition to ascend the value ladder and expand beyond smartphones. Chairman Young Liu emphasized this during his visit to India in August, stating that Foxconn aims to produce goods for sectors such as information and communication technology (ICT), electric vehicles (EV), energy, and digital health as part of its next growth phase.

“We intend to enhance our position on the value chain as much as possible in India. That’s our plan for the ICT sector,” he stated on the sidelines of the inauguration of the company’s extensive industrial housing project in Sriperumbudur. “For sectors beyond ICT, we also see opportunities in EVs, energy, and digital health industries, like wearables for personal and home medical use.”

Dhruv Shekhar, a senior associate at Koan Advisory Group, noted that the company’s diversification approach is embodied in its 3+3 growth model, which concentrates on three industries: EVs, digital health, and robotics — alongside three pivotal technologies: Artificial Intelligence, semiconductors, and next-gen communication. He remarked that the strategy underscores Foxconn’s goal of evolving from a conventional electronics manufacturing titan to a holistic technology solutions provider.

“Foxconn’s global framework revolves around large-scale contract manufacturing, capitalizing on economies of scale and sustaining an effective, integrated supply chain. However, in recent years, it has adapted its strategy to expand its portfolio and lessen its dependence on traditional contract manufacturing,” he elaborated.

One for the road

Regarding energy, Foxconn is aiming to target batteries, which will be linked to its broader EV strategy, and is establishing a battery energy storage system (BESS) plant in Tamil Nadu, which will mark its second such facility globally. Last month, ET reported that the firm is exploring land near Manallur in Tiruvallur district, roughly 50 km north of Chennai.

Liu stated that the iPhone contractor’s operations in India have escalated to over $10 billion, and…that Foxconn had poured $1.4 billion into India by August this year. Notably, after iPhones, it is not solely BESS but also devices like iPads and AI servers that the firm is aiming for.

Currently, Foxconn is being pursued by numerous states to establish a ‘Foxconn City’, similar to its vast operations in Zhengzhou, China. Liu has already indicated that Foxconn intends to create communities in Tamil Nadu, mirroring its model in regions like Taiwan and China.

Moreover, other states do not wish to fall behind. Telangana has presented the company with an offer of 2,000 acres to develop a ‘Foxconn city’ there, while reports suggest that Andhra Pradesh has proposed 2,500 acres for an industrial park, and Karnataka has made an offer of 300 acres for a supplier park.

Another significant investment that occurred this year was Foxconn-subsidiary Yuzhan Technology investing ₹13,180 crore for a facility in Tamil Nadu. This will mark the first such facility in the nation to assemble smartphone display modules, primarily for Apple. Inquiries directed to Foxconn for comments went unanswered.

Strategic foothold

“India is an essential component of Foxconn’s larger international strategy, serving as a pivotal hub for diversification, resilience, and a more robust supply chain,” remarked Sana Hashmi, post-doctoral researcher at the Taiwan-Asia Exchange Foundation. “This strategy mitigates Foxconn’s reliance on China while aiding Apple’s endeavor to produce more products in India. Foxconn’s initiatives closely align with India’s ‘Make in India’ campaign, which encourages foreign investment and local manufacturing via incentives, infrastructure enhancement, and tax concessions.”

Nonetheless, Hashmi cautioned that Apple might now ramp up investments in the US, propelled by governmental incentives and Trump-era regulations, particularly ‘America First’.

“President Trump’s election and his tariff policies have introduced considerable unpredictability into global manufacturing approaches,” Shekhar stated. “Liu stressed that the company will finalize its US strategy only after January 20, once Trump assumes office and his tariff policies become clearer. In this regard, Foxconn’s recent $33-million investment through a subsidiary to acquire land and factory spaces in Harris County, Texas, underscores its proactive stance.”

However, some, like Hashmi, contend that the company will seek to balance its operations in America while also sustaining a global manufacturing presence to maintain cost effectiveness, thereby making India a vital part of this strategy. “Foxconn, influenced by Apple, may amplify its production in India next year,” noted Lori Chang, senior analyst at Taiwan-based Isaiah Research. “The main emphasis on production in India next year will pertain to iPhones. We foresee the share of iPhones manufactured in India escalating from this year’s target of 12-16% to 23-27% next year.”

Chang further indicated that the share of AirPods produced in India by Foxconn is also anticipated to experience a substantial increase next year. Overall, she indicated that Foxconn will seek to regain its position within Apple’s supply chain by 2025 and synchronize with Apple’s expectations through a considerable collaborative effort aimed at enhancing the share of production in India.

Counterpoint research vice president Neil Shah similarly believed that as Apple expands its presence with a China+1 strategy, Apple’s vital partners like Foxconn and Tata would gain, providing them with immediate scale to diversify into additional product categories and successfully integrate into the PLI scheme to reap its benefits.

“India is emerging as a significant element of Foxconn’s strategy beyond China, Taiwan, and Vietnam, as the market nears growth, and governmental policies promoting incentivized local manufacturing present lower barriers to expansion and development,” Shah explained. “Foxconn’s new strategy unveiled a few years back adheres to the BOL model (build, operate, and localize) to grow closer to its clients or where its clients aspire to establish.”

Obstacles

Foxconn’s ascent has not been devoid of controversies. In December 2021, a food poisoning incident occurred at its facility in Tamil Nadu, resulting in the factory being placed on probation by Apple and temporarily shuttered. This year, the company faced accusations regarding discrimination in its hiring practices when reports emerged that it does not employ married women.

However, Liu refuted these claims, asserting that Foxconn hires without regard to gender. “Women constitute a significant portion of our workforce here. I’d like to highlight that married women greatly contribute to our endeavors,” he commented.

Yet, there are additional issues regarding the wellbeing of the workforce — the majority of whom are women. “I am worried about the reproductive health of young women,” Dr. Jenny Chan, co-author of the book *Dying for an iPhone*, informed ET. “The impact of aluminum dust and other hazardous materials should not be overlooked concerning pregnant women. Especially in India, where the female population is larger, it is crucial that Foxconn extends maternity leave to women, ensuring ample time to rest and recover as insufficient sleep can be detrimental to health.”

She emphasized the necessity of providing nutritious food for workers. Furthermore, maintaining hygienic and welcoming living conditions is essential. Additionally, ensuring workers have an effective overall production schedule and access to counselors and mental health professionals is equally important.

“Health is not an isolated matter,” Chan elaborated. “What I have noted in Foxconn’s facilities is that even though numerous individuals share a space, they scarcely have time to interact or familiarize themselves with one another due to varying shifts and the fatigue experienced after work. Friendships and social support are cumulative to overall wellbeing.”

The path forward

Hashmi noted that Foxconn’s achievements in India would hinge on a comprehensive strategy that prioritizes local production, workforce education, sustainability, and community connections. “By fortifying supply chains, investing in workforce training, and cultivating local collaborations, Foxconn can emerge as a key facilitator of India’s economic progress, social advancement, and technological growth, thereby enhancing its presence in global manufacturing and innovation,” she remarked.

Shah also indicated that as Foxconn establishes a manufacturing ecosystem on a large scale, initiatives such as cleaner, safer working conditions and housing focused on social wellbeing will be vital. “Creating quality educational and medical facilities for the employees who have relocated to work at Foxconn will be critical. Furthermore, effective and meaningful ESG policies will also be essential for Foxconn to cultivate a strong footprint and market presence in India,” he pointed out.