Mohit Oberoi
Taiwanese contract manufacturer Foxconn has said that it hasn’t signed any definitive agreements yet to set up a greenfield plant in India. Some media reports suggested that the country has finalized the Indian state of Karnataka for its next plant.
Foxconn is formally known as Hon Hai Precision Industry Co Ltd and is the largest contract manufacturer of Apple products. The company’s chairman Liu Young-way recently visited India and met several Indian leaders.
In his statement, Liu said, “My trip this week supported Foxconn’s efforts to deepen partnerships, meet old friends and make new ones, and seek cooperation in new areas such as semiconductor development and electric vehicles.”
Notably, Foxconn as well as several other manufacturing companies have been looking to diversify their manufacturing from China amid the growing US-China rivalry. Asian countries like India and Vietnam have emerged as attractive locations.
India is offering incentives to electronics manufacturers as the country seeks to capitalize on the “China plus one” sourcing strategy that many US companies are contemplating.
Indian stocks outperformed global markets in 2022 and the country’s benchmark Nifty 50 gained 4.3% even as most leading global markets closed in the red.
In 2023 also, it is expected to be the fastest-growing major economy as China is targeting GDP growth of around 5%. There is a guide on how beginners can buy stocks in India with a regulated broker.
Foxconn Looking to Expand in India but No Definitive Agreement Yet
Several reports said that Foxconn would build a 300-acre site near Bengaluru’s Kempegowda International Airport which would create 100,000 jobs. The Indian state of Telangana has also suggested that Foxconn would invest in the state.
Meanwhile, Foxconn has said that it hasn’t yet signed “any binding definitive agreements” yet. It said, “Negotiations and internal review are ongoing. Financial investment sums discussed in media are not information being released by Foxconn.”
It also stressed that the employment figures reported in the media are not direct jobs. Notably, reports of Foxconn investing big sums of money in India have been around for the last many years. However, it has gained traction only over the last year.
Along with producing gadgets, Foxconn is also expanding into producing EVs (electric vehicles). It is already making the Endurance pickups for Lordstown Motors and also partnered with Fisker for its second car project.
Saudi Arabia and Foxconn Partnered for EV Project
Last year, Foxconn and Saudi Arabia announced a joint venture to produce EVs. The investment would be made by Saudi Arabia’s PIF (public investment fund) which is the sovereign wealth fund of the oil-rich country.
As part of the agreement, PIF and Foxconn would form a joint venture under the name Ceer, which would sell EVs under the same brand.
Ceer would be the first EV brand in Saudi Arabia and would sell both sedans and SUVs in Saudi Arabia and the MENA region. Foxconn would make the electric architecture for the cars. The cars would be made in Saudi Arabia and the deliveries are expected in 2025.
Notably, this is not the first time that Saudi Arabia is investing in an EV venture. It is the biggest shareholder of Lucid Motors, the US-based EV company that went public last year. Saudi Arabia is also rumored to acquire Lucid Motors. There is a guide on how beginners can buy Lucid Motors stock.
Coming back to Foxconn, the company anyways moved some production from China last year amid the country’s now abandoned zero-COVID policy.
US-China Rivalry Has Increased
Amid the growing US-China rivalry, several companies are now looking at alternate sourcing destinations. So far, we haven’t seen a mass exodus of companies from China though as it is not possible to replicate China’s manufacturing ecosystem in a short span.
That said, given the fragility of US-China relations and signs of a tech war, companies are trying to play it safe by diversifying their exposure.
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This article was written for Business 2 Community by Mohit Oberoi.
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