The world’s largest provider of electronic manufacturing services is making moves for the transition of iPhone production from China to India. Apple may need a new country as a production base if the current U.S. administration fulfills its threat of additional tariffs.
It’s three weeks to go until the G20 summit in Japan where President Trump promised that he would make up his mind about the new round of punitive tariffs against China. At least 300 billion worth of products are at stake. This expanded range of products with 25% tariffs on them would effectively cover the entire import from China to the U.S.
Hon Hai Precision Industry (or as better known by its infamous trading name, Foxconn) is the primary manufacturer of iPhones, Apple’s most profitable product. Although it hasn’t been asked to do so (or so they tell), the Taiwan-based company assures its client that the main supplier of iPhones sold in the U.S. is ready to move production to India if necessary.
Twenty-five percent of Foxconn’s production capacity is outside of China. Foxconn board nominee Young Liu told this at an investor briefing in Taipei on Tuesday. ’We have enough capacity to meet Apple’s demand’ – said Liu at the event.
The chief of semiconductor division also informed the audience that Foxconn was running a quality test for iPhone XRs produced in India. If these locally made flagship smartphones are up to the standards, the company begins mass production in the suburbs of Chennai (Bay of Bengal, East India). A facility of Wistron (another manufacturer from Taiwan) is assembling older models in Bangalore.
Moving production to the U.S. is an unlikely outcome, unless the transition will be backed by wide-range automatization. Foxconn is actually building a factory of mobile displays for 13,000 workers in Wisconsin, but to employ local workers there the federal state has to pay the labour costs for years upfront. The Taiwanese company agreed to build the facility in exchange for $4,5 billion in tax breaks and other incentives. Automotive companies condition their late investments for similar incentives in Eastern Europe.