Taiwanese electronics juggernaut Hon Hai Precision Industry Co., Ltd., better known by its exchange name Foxconn Technology Group, is starting to move its iPhone operations out of China. Its next major destination seems to be India, whereas the timing of the move is said to have been prompted by Apple itself.
Reuters reports Foxconn gave in to direct pressure from Apple and started ramping up investments in an existing Southern Indian factory in Sriperumbur which is meant to bear an increased iPhone production burden come 2023. Insiders familiar with the matter claim the initiative will create 6,000 jobs in the country. Naturally, the main implication is that this will result in a comparable output reduction in China given how the global smartphone market is as saturated as they come. The Indian plant targeted by the expansion has so far only made minor volumes of iPhone XR models, as per the same source.
Don’t mistake profit margins for PR points
For the uninitiated, Apple is currently navigating a post-coronavirus minefield of an economic and political reality in which association with China is not exactly a badge of honor among its countrymen. Nevertheless, while the amount of negative Western press China has been getting since the turn of the year is certainly way above the historically established levels of proxy bickering between the world’s two largest superpowers, it’s not like Apple can just divest itself from it overnight – or ever.
Its dependence on the Far Eastern country is an extremely convoluted web of affairs, most of which come in the shape of investments worth billions of dollars. In effect, it’s always provoking an administration that’s not exactly friendly toward foreign capital even on its best day. Granted, all of this largely rests on the fact Cupertino still cares a great deal about its image in the West. Yet in the age wherein Fortune 500 CEOs regularly sound like Bond villains, it’s hard to be too critical of Tim Cook’s leadership.
At the end of the day, Apple’s fundamental problem with leaving a large portion of iPhone manufacturing in China over the next ten years and beyond is that local labor costs have been on a massive upswing for years now. Which is to be expected of a rapidly developing economy, particularly one unconcerned with human rights abuses. In other words, while the current geopolitical climate is suitable for redirecting, say, a billion dollars’ worth of infrastructural funds to China’s top regional rival, never mistake margins for morals.