Apple can reportedly survive a China ban as Foxconn shifts to India

Andrew Cummings
June 12, 2019

Beyond manufacturing, China is also Apple's largest global market.

Foxconn, the world's top contract electronics assembler, said it had enough capacity outside China to meet Apple's demand in the American market if the need should arise for the iPhone maker to adjust its production lines due to the U.S.

He touted the group's ability to tackle what he called an "increasingly tough" situation amid the trade war, citing the company's production bases in 16 countries.

While tensions between China and the USA over an ongoing trade war see no signs of letting up, Foxconn - Apple's most prolific manufacturer - is prepared and capable to move its manufacturing (for Apple products to be exported to the U.S.) out of China should relations between the two countries become more tense, board nominee and semiconductor division chief Young Liu told an investor briefing in Taipei earlier this week.

Shares in Foxconn, formally known as Hon Hai Precision Industry Co Ltd, have dropped around 20% since Gou announced in April his plans to run for president.

The news should be particularly encouraging given the alternative scenario which would likely see Apple having to bear the brunt of a more costly iPhone.

The U.S. market accounts for one in every four iPhones sold worldwide, "so it represents a huge portion of Foxconn's manufacturing business inside China", Strategy Analytics analyst Neil Mawston said. If Foxconn freed up non-China production capacity for iPhones, other smartphone clients could find their orders temporarily delayed or sidelined in the short-term, he added. But without that, some of its Chinese factories may be idled. Apple's stock has since rebounded, but concerns about China remain.

At the briefing - which was first reported by Bloomberg - Liu said the company was investing in India, where several older iPhone models are already made at a plant in Bangalore.

Foxconn has also agreed to build a 13,000-worker facility in Wisconsin in exchange for more than $4.5 billion in government incentives.

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