While Taiwan’s $206 billion Hon Hai Technology Group (Foxconn) will continue to expand assembly and component operations in India, it will also continue to apply for government incentives to increase its competitiveness, its Chairman and CEO Young Liu, told analysts. .
Hon Hai is the world’s largest electronics manufacturer. In India, it manufactures Apple iPhones and made the country its second home after China, with plants in both Karnataka and Tamil Nadu. Recently, the company purchased a 300-acre site in Bengaluru and also started construction of the $500 million plant in the neighbouring Telangana. It also partnered with the Vedanta group to manufacture semiconductor fabs.
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Updating the company’s moves in India and the differentiation with competitors, Liu said, “As for labour costs, India also has its advantages. Hon Hai will continue to apply for government incentives, to increase its competitiveness,” he said.
From 2006, Hon Hai entered India, ahead of competitors and at a larger scale. During this period, the company accumulated much experience in managing local employees, supply chain and logistics, which are all important competitive advantages that have allowed the company to move at a pace that is faster than the market. It has also allowed the company to expand quickly, he said.
Increasing production
Apart from continuing this momentum, the company will also be increasing production yield locally. India has now reached a population of 1.4 billion people, translating to a large potential market for mid-to-high-end products which clients are focusing on. Hence, it is necessary for the company to continue to expand assembly and component operations in India. “We see that more and more suppliers are investing in establishing plants in India and believe that this will become more prominent as time goes on,” Liu said.
Hon Hai has a holistic development of its supply chain and not just in India — from Taiwan, mainland China, SE Asia, South Asia, Middle East, Europe to the US, and industries spanning from ICT to electric vehicle to semiconductors and to software.
Challenges
To invest in a new region or country, challenges would include not just the language, but also culture and manufacturing capabilities, as well as supply chain completeness. Thus far, many players are still in the learning phase as well, he said.
Peter Bendor-Samuel, CEO, Everest Group, a global research firm, recently told businessline that the US, and to a lesser degree, its European allies are increasingly concerned about an over-dependence on China. Hence, Foxconn’s clients are insisting on the decoupling or at least a diversification. This secular trend is well underway and is only strengthening as the superpowers adjust to the rise of China. India is the next best location for much of this work, given its large domestic market, educated workforce, and growing logistical capabilities.
Globally, Hon Hai Group has over 173 campuses and offices covering over 24 countries/regions. This year, Liu said, it expanded in Taiwan, mainland China, India, Vietnam and Germany. Under the localisation of production trend in the EV industry, the company will continue to expand our capacity in preparation to satisfy our customer demand and stand out with our global advantage.
Published on May 19, 2023
