Sending Mixed Signals: Apple supplier Foxconn sets up global business base in China’s Zhengzhou

beijingwalker · Apr 26, 2023

Sending Mixed Signals: Apple supplier Foxconn sets up global business base in China’s Zhengzhou

While Apple is trying to pull most of its production facilities out of and away from China, Foxconn, Apple's largest supplier and manufacturing partner has set up a new global business base in China's iPhone City, Zhengzhou
Mehul Reuben Das
April 26, 2023 14:45:49 IST

It seems that no matter what, come hell or high water, international tech brands are just not ready to sever their ties with China’s manufacturing prowess, not that easily at least. At a time when Apple and most other tech giants, barring Tesla are vying to reduce their dependency on China, and are opening up production offices and factories in other countries.

Foxconn, Apple’s largest supplier and manufacturing partner has set up a new global business base in China’s Hanan province, Zhengzhou city. If the name rings a bell, Zhengzhou is the same city where factory workers participated in a massive protest and a subsequent walkout from the country’s largest Apple factory.

The Taiwanese business already operates the world’s largest iPhone manufacturing, reaffirming its commitment to the Chinese market as Apple’s suppliers diversify their supply lines.

According to the government-backed Henan Daily, provincial Communist Party secretary Lou Yangsheng, provincial governor Wang Kai, and Foxconn CEO and chairman Liu Young-way attended the inauguration ceremony on Tuesday in Henan’s capital Zhengzhou.

According to the report, the new business centre will primarily focus on applying new technologies in Foxconn’s business, developing development plans, researching core technologies, and incubating new projects, and provincial authorities have pledged their “full support for Foxconn and its upstream and downstream partners along the supply chain.”

The Foxconn development plan is “highly consistent” with Henan’s “ten strategies,” which include boosting growth via innovation and digitalisation, according to the study, and the two parties have inked a fresh set of strategic partnership agreements.

While Foxconn has been Apple’s largest contract manufacturer, its manufacturing activities in Zhengzhou, sometimes known as iPhone city, was severely disrupted last year because to a Covid-19 outbreak, which resulted in huge walkouts and worker protests demanding tougher pandemic measures and salaries.

The fiasco resulted in massive delays in iPhone shipments to Apple’s home market as well as Europe over the holiday season last year, pushing the Californian conglomerate to hasten the relocation of certain products outside of China.

Foxconn, previously known as Hon Hai Precision Industry, is apparently preparing a new facility in India to manufacture iPhone components, as well as a new factory to manufacture AirPods.

According to a January projection by Taiwan’s DigiTimes Research, India is expected to manufacture up to half of Apple’s iPhones by 2027, up from less than five per cent this year. According to the article, this would put the size of manufacturing on level with China.

Foxconn also acquired a new location in Vietnam in February to address “operational needs and expand production capacity” in addition to India.

While Apple increased manufacturing outside of China, Henan’s party secretary Lou launched on a charm offensive in February to persuade Foxconn to “take root” in the province and guarantee the firm that the government would fully back its local operations.

Despite Apple’s drive to lessen reliance on Chinese facilities, the Post reported last month that several of its suppliers have raised reservations about the expense of migration.

China is also an important customer market for Apple. CEO Tim Cook last month met Chinese Premier Li Qiang and other top officials at an economic summit in Beijing, where he characterised the company’s relationship with the country as “symbiotic”.