Padma Bhushan for Young Liu embodies how Foxconn has grown roots in India

But to flower further, it may need to reduce dependence on Apple Inc

Few international companies have courted India as Foxconn has. In July last year, its Chairman, Young Liu, promised that “Taiwan is and will be [India’s] most trusted and reliable partner.” In September, V Lee, a Foxconn representative in India, wished Prime Minister Narendra Modi on his birthday in a LinkedIn post, and said: “We will work even harder to present you with a greater birthday gift next year, aiming for another doubling of employment, FDI, and business size in India.”

In a sign of Foxconn and India coming closer together, Liu was conferred with the Padma Bhushan, the country’s third highest civilian award, in the customary pre-Republic Day announcement, making him the first head of a Taiwanese company to be honoured this way.

Foxconn has quickly emerged as a lynchpin of the Make in India movement, notching up milestones in electronics manufacturing. This has to be seen in the context of Liu being an early mover in global business to spot India as an important cog in diversifying production lines in the face of former United States President Donald Trump’s trade war with China.

That means Foxconn’s rapidly developing ties with India go beyond promises and birthday wishes. Last year, the world’s largest electronics manufacturing services (EMS) player with annual revenues of $200 billion, said it would invest another $2 billion in India in areas such as mobile phone assembly, electronics assembly, and – this would have surprised many -- electric vehicles.

A request for an interview with Liu did not elicit a response.

Made in tech heaven

In many ways, India and Foxconn are a perfect match. The Indian government has not made much headway in luring Taiwanese tech companies to India, especially in semiconductors. Even Taiwan OSAT (outsourced semiconductor assembly and test) companies, pushed by their automotive clients to set up plants beyond China and Taiwan, have preferred to look at Vietnam, Malaysia, and the Philippines, rather than India, owing to taxation and import duties issues.  

Foxconn could be the magnet to help India make inroads into Taiwan’s high-tech semiconductor industry. But its future in India is inexorably linked to the Cupertino-headquartered Apple Inc, which accounts for nearly 70 per cent of Foxconn’s global revenues, most of which comes from China. With Apple Inc shifting production of iPhones to India from China faster than anticipated, catalyzed by India’s Production-Linked Incentive (PLI) scheme, Foxconn needs to speed things up in India.

Despite being in India since 2015, Foxconn became a force in India after Apple Inc’s India thrust. Government data for calendar year 2023 shows it accounted for 67 per cent of the iPhones assembled in India, and 50 per cent of their exported value. Analysts say nearly 80 per cent of Foxconn’s India revenues of $10 billion (Rs 83,000 crore) annually comes from Apple work.

The business opportunity has become bigger.

Raising the game

Apple Inc is shifting more iPhone production capacity from China to India than envisaged in the PLI scheme. The plan is to attain a value of Rs 200,000 crore by FY26, nearly double of what was committed.

Geopolitical tensions mean India has nearly shut the doors on Apple's China-based vendors. This compelled Apple Inc to change its strategy from wooing Chinese vendors to looking for non-Chinese companies (including the home-grown Tata) to build its India supply chain. That was necessary, as Apple had committed to a value addition of 30 per cent by FY26, but not reached half that target after three years.

For instance, Apple Inc’s Chinese supplier, Luxshare, assembled AirPods in China. But, in India, the contract went to Foxconn, which is setting up a new plant for this at an investment of $200 million. Luxshare was planning to buy a defunct Motorola mobile plant in Tamil Nadu to make components for Apple, but has shifted the investment to Vietnam. 

Foxconn is ready to fill the gap and has announced investments of $500 million to set up two component plants. Discussions are also ongoing to expand the assembly capacity of iPhones. This will mean virtually doubling its India headcount to more than 100,000.  

But can Foxconn reduce its dependence on Apple Inc?

Reaping non-Apple fruits

Foxconn’s first foray into India was through Bharat FIH, which assembles non-Apple phones for other vendors. Despite being eligible for mobile phone PLI, it has failed to meet its incremental revenue targets each year in order to get the incentives. The company has lost clients such as Xiaomi.

Foxconn’s plan to form a joint venture with Vedanta to set up a chip plant with an investment of $10 billion was shelved. But the business logic remains. It buys $40 billion worth of chips every year. Its automobiles foray -- assembly of electric cars and supply of electronic components to EVs -- can be fed by its own chip plant, securing the critical part. Last heard, Foxconn wants to set up a fab plant on its own, but according to the Minister for Electronics and Information Technology, Rajeev Chandrasekhar, though discussions are on for a compound fab plant to make chips for auto components and mobile devices, Foxconn has yet to submit a concrete proposal.

A few weeks ago, Foxconn announced a tieup with HCL Group to set up an OSAT unit in India. It also plans to apply for a compound semiconductor plant based on gallium nitride, which powers chips for the auto component industry.

Foxconn has been scouting for land in states such as Tamil Nadu to set up the plant. But company watchers say it will be a long haul. As an EMS player, it has to find a reliable partner (like Apple Inc in mobile devices) for whom it will assemble EVs. But most auto companies have their own manufacturing facilities in India.

So, who will Foxconn ride with on its India journey?