the reasons behind Foxconn’s absence from the Asia tour iPhone

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Wherever Foxconn goes there has always been the implication that the world’s biggest electronics manufacturing company will set up a factory to assemble the planet’s hottest gadget, and with it create thousands of jobs. On only a few occasions has that happened. Both India and Brazil host iPhone factories. Indonesia and the US do not. i, India’s Narendra Modi and Prayuth Chan-Ocha of Thailand, the conversation has been much more about Foxconn’s new products, and what role those nations can play in developing them. The iPhone wasn’t a feature.

Young Liu of Foxconn Technology Group avoided talking about the one customer for whom the Taiwanese company is best known when he visited Asia last month. The chairman avoided talking about producing Apple Inc. iPhones in meetings with the leaders of India, Indonesia, and Thailand in favour of discussing semiconductor research and the construction of electric vehicles. That stands in stark contrast to eight years earlier, when Jokowi, the then-Governor of Jakarta, met with Liu’s predecessor, Terry Gou, and they made a $1 billion investment promise to Indonesia. Though not stated specifically, there was a possibility that the Southeast Asian country, which had 255 million people at the time, could develop into a new centre for iPhone production. Jokowi’s corporate credentials were bolstered by the Foxconn transaction, which led to his election as president.

Highlights

  • But now Foxconn has inked a deal with Vedanta Ltd., part of billionaire Anil Agarwal’s resources empire, to develop and manufacture chips. Vedanta has no background and no obvious reason to be in semiconductors, and the agreement signed in February is merely a memorandum of understanding. Yet it speaks to Foxconn’s recent strategy to establish local research and development partnerships, rather than simply set up factories to leverage low-cost labor. The three countries also have policies to cultivate a local electric-vehicle industry. Production of EVs in India would dovetail with Modi’s plans to build up that sector and move toward a stated goal of net zero emissions by 2070, a plan that necessitates homegrown development and solutions.

  • India, for example, has dreams of creating a semiconductor industry. Having trained millions of brilliant engineers — many of whom find better opportunities overseas — and watched rival China climb the ranks of the global chip sector, New Delhi wants to be part of the action. This is not a new fantasy. Various Indian governments have floated plans and put aside funds to achieve that goal over the past two decades. They’ve gotten nowhere.

The key reason in favor of believing at least some of these projects will come to fruition is that Foxconn needs them to, as much as local politicians do. While the company has good reason to open new iPhone factories around the world to reduce its reliance on China, it never truly needed to look beyond its key manufacturing hubs of Shenzhen and Zhengzhou. Even amid the global pandemic and supply chain disruptions, Foxconn and Apple have managed to keep churning out gadgets with relatively little disruption.

In February, Thailand passed laws that will help the country transform 50% of its vehicle production to electric models by 2030. That policy includes tax exemptions and subsidies. Foxconn has already signed on. Last year, it agreed to collaborate with state-owned oil-and-gas conglomerate PTT Pcl to make both the software and hardware the goes into EVs, with total investment of $1 billion to $2 billion. Vehicle production could commence as early as 2024.Skepticism toward all these announced programs is warranted. Foxconn has a less-than-stellar track record when it comes to following through on its reported investments. Its debacle in Wisconsin, originally slated to be a leading-edge display-panel factory but which will be much less, is perhaps its most famous example. (Foxconn scaled back that facility, citing a change in market conditions). Many plans also depend on local partners and governments, which are out of Foxconn’s control.

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