Foxconn AirPods factory: Why tech companies shifting production away from China is good news for India

Apple's biggest manufacturer Foxconn is reportedly setting up a new factory in Telangana to make Apple AirPods. The Taiwanese manufacturer is reportedly spending $200 million to set up a factory dedicated to making the wireless Bluetooth earbuds

The report comes at a time when Apple is trying to diversify its manufacturing hubs and become less reliant on China. And India has seemingly become the next destination. 

Foxconn deal:

• Foxconn doesn't make Apple AirPods usually, because of low-profit margins. It is the leading manufacturer of other Apple products such as the iPhone. 
• However, Foxconn is said to have accepted the recent contract for AirPods to "reinforce engagement" with Apple in hopes of securing contracts for new products as well.
• Foxconn's India focus is also said to have been directed by Apple which wants to diversify its manufacturing locations. 
• A Foxconn facility is sure to add new jobs in the Indian market. However, there are challenges ahead. 
• The Taiwanese company is said to be planning to start operations for AirPods as soon as early 2024. 

Super stoked to announce a mega investment by @HonHai_Foxconn in Telangana that will create employment for a whopping One Lakh youngsters in Telangana 😊

The announcement is made after Chairman of FoxConn Mr Young Liu met Hon’ble CM Sri KCR Garu at Pragathi Bhavan today pic.twitter.com/zzFAnBxcvz

— KTR (@KTRBRS) March 2, 2023

Challenges: 

• For Apple, Foxconn, and other suppliers to recreate the Chinese ecosystem they built over a decade will surely take time. 
• India is currently held back by the unending red tape despite the Modi government's push for "Make in India", lack of infrastructure, logistical connectivity, and lack of other suppliers in the region.
• A recent Financial Times report on the Foxconn iPhone assembly factory in India revealed that nearly 50% of components were not fit to go ahead. 
• China also has the advantage of a capable "neighbourhood" made up of Hong Kong, Taiwan, Japan, South Korea, etc. 
• India's South Asia neighbourhood is more into textile manufacturing than tech manufacturing.  
• Moreover, Nikkei Asia reports that Western manufacturers are still requiring the expertise of Chinese workers to manage facilities and manufacturing at hubs set up outside China.
• This expertise, Nikkei Asia reports, cannot be easily conveyed through a manual. 

Foxconn in India:

• Other than the Chennai plant, there have been reports that Foxconn is planning to set up a factory in Karnataka. 
• Karnataka CM Basavaraj Bommai claimed that Foxconn has decided to invest $1 billion in the state to set up the factory. However, Foxconn has not confirmed the announcement so far. 

#Bengaluru
We got conned in the name of Foxconn. pic.twitter.com/1ePwxrxOp7

— Kamran (@CitizenKamran) March 10, 2023

• There was also a report that Foxconn and Apple engaged in lobbying to relax the labour laws and extend shift hours from 9 to 12. 
• The lobbying report comes even as in 2020, a Wistron iPhone plant in Bengaluru was vandalised by workers over unpaid salaries. 
• While Apple seems to be the latest entry into the manufacturing business in India, its rivals such as the South Korean Samsung have already been making smartphones in India since 2007.