Because of rising tensions between the U.S. and the Chinese government, U.S. companies are continuing to reevaluate how much they depend on China.
People who know about the matter told Bloomberg that Foxconn plans to build an iPhone parts factory on a 300-acre plot of land near Bengaluru’s Kempegowda International Airport. Bangalore, which is also called Bengaluru, is the capital of the Indian state of Karnataka, which is on the southwestern coast. This state in India has one of the highest GDPs per person.
On Friday, government officials confirmed what Bloomberg said, which was that the new building would create 100,000 new jobs. Bloomberg says that Foxconn’s investment in the project will be one of the largest that India has ever seen.
People in India know that Bangalore is a major place for engineering and technology.
After the Covid lockdowns and manufacturing slowdowns caused a lot of trouble, Foxconn and other technology suppliers have tried to move away from China, which has always been the center of manufacturing. Videos of Foxconn workers fleeing the company’s iPhone manufacturing factory went viral on Western social media after the lockdowns.
Because of this trend, India and Vietnam have become possible replacements for China as the world’s most important manufacturing and supply hubs. Former Indian government officials told CNBC that Apple wanted to increase production in India such that 25% of Apple’s output came from there. Foxconn is already in India. It has a factory in the city of Chennai, which is in eastern India.
Here is why Foxconn plans to spend $700.0 million in India:
- Foxconn makes the most iPhones for Apple than any other company. And China’s policy of zero covid had bad effects on both.
- Protests in China’s iPhone City stopped the making of iPhones and made them unavailable around the world.
- Apple’s most recent quarterly report showed that sales of iPhones have dropped by a lot during the holiday season. One reason is that covid lockdowns in China mess up the supply chain.
- For customers to get their hands on the new iPhones, they had to wait 30–40 days. A guess is that this caused Apple to lose sales of 6–10 million iPhones. This means that $6–10 billion in sales will be lost.
- Apple learned that relying on a single supplier and a single place to make their products can be a mistake.
- These companies are helping their manufacturing by putting money into other economies.
Why in India?
- Indians can speak and understand English, which is the first reason.
- By offering a Production Linked Incentive scheme and other benefits, the Indian government is trying to get more companies that make things to move to India.
- India has also made huge improvements in how easy it is to do business there.
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