Investing Foxconn in other countries will allow Apple to diversify iPhone production outside of China

Early this month, China began easing its crackdown on COVID and Foxconn says it will soon allow workers at the Zhengzhou facility to return to their rental apartments just off campus. During the crackdown, Foxconn refused to allow employees on campus to eat in the company’s dining room and forced them to consume their meals in their dormitories.

Apple can’t just pack up and move iPhone production to a new country

Apple cannot just pick up iPhone production and move it to another country. It needs to find an area where factories can be built, qualified workers can be found, and suppliers are nearby to provide components in the quantity and quality Apple needs. One country where Foxconn already builds certain iPhone models is India. Originally, Foxconn built older iPhone models in the country to avoid import taxes on units shipped into the country.

Now Foxconn is manufacturing the iPhone 14 in India and is looking to assemble more up-to-date models, some for global distribution. Last month, Foxconn announced it was planning to increase the workforce at its Indian factory from 17,000 to 70,000 in the next two years.
This is reported by the English-language newspaper South China Morning Post, Foxconn has invested $500 million in its Indian subsidiary. The company was able to inject the money into Foxconn Hon Hai Technology India Mega Development Private Limited from its Foxconn Singapore Pte Ltd. unit.
Apple should be concerned. Since production in Zhengzhou in November only used 20% of production capacity (says Ming-Chi Kuo, TF International’s reliable analyst), the iPhone 14 Pro series will be in short supply this month and January. That’s not good, especially if you’re in the holiday shopping season. Kuo expects Foxconn to use 30% to 40% of its iPhone 14 Pro production capacity in Zhengzhou this month. That’s better, but still far from normal.

In addition to investments in India, Foxconn agreed in August to invest $300,000 in a plant in Vietnam that will expand production there. Vietnam is another country, besides India, that Apple has reportedly considered as a replacement for China.

Apple is reportedly getting more aggressive with its plans to move iPhone production out of China

The Wall Street Journal reported last week that Apple is getting more aggressive with its plans to exit China completely. The article mentioned some of the countries we’ve often discussed as possible landing sites for iPhone production (and we even mentioned the pair in this article), India and Vietnam.

Foxconn seems to be spreading its investments everywhere. Last week it spent $58.98 million on an investment in the Czech Republic. There, the manufacturer makes smartphones, screens and cloud servers. Foxconn also has research and development centers in that region. At the same time, Foxconn put $142 million into its Taiyuan, China facility, which it considers a long-term investment.

Apple is already moving part of its chip production from Taiwan to TSMC’s US factories in Arizona. One facility will produce 4nm chips from 2024, while the second plant will go online and produce 3nm chipsets in 2026. Apple CEO Tim Cook spoke at a TSMC press conference in Arizona last week confirmed that Apple plans to buy chips made in the US by TSMC.

Apple hopes its supply chain will look very different in five years from now.