Hon Hai Technology (Foxconn) has been ramping up production capacity in India to extend support to more product lines, according to industry sources.
Foxconn has been adjusting its global deployments to support customers' production goals. For new products that the customers are launching in the second half of 2024, Foxconn has been establishing new capacity in India and Mexico, the sources said.
To meet customer's needs, India is a key area for Foxconn's capacity expansion although there is still room for improvement as far as the country's production environment is concerned, according to the sources. Changes in the global market and rising US-China tensions are some of the major factors behind Foxconn's expansion in India.
Apple is not only having its iPads and AirPods made in India but has also started trial or small-volume production in India for other product lines, the sources said. Some production for the new iPhone series to be released later this year will take place in India, the sources added.
Customers eyeing enormous market in India
Apart from geopolitical factors, the enormous market of India is also a major reason for customers to have Foxconn expand production in the country, the sources said.
A major customer reported sales of about US$8 billion from India's market in its fiscal year ended March 2024, an increase of more than 30% year on year, the sources noted. The sales growth seems impressive, but the customer has a share of only about 3.5% in India's handset market, where annual sales amount to 690 million units, the sources said, adding that the potential growth in India for the customer is enormous.
Although India has announced that it will reduce import tariffs for handsets and some components from 20% to 15%, the customer still hopes to leverage local production to boost its competitiveness in the local market, the sources said. The customer has also opened its own retail stores in India to gain local market share, the sources noted.
The customer is also seeking to diversify its risk amid intensifying competition in China, the sources said. The US-China tensions are creating much uncertainty in China's market, where spending is clearly waning. At the same time, China is making efforts to support local handset vendors and their supply chains.
Article translated by Rodney Chan
