Apple defies Trump to expand India manufacturing

Apple doubles down

Apple looks to be doubling down on its manufacturing plans in India, despite Donald Trump’s demands that the company reshore its production facilities to the US.

The tech company’s key contractor, Foxconn, is setting up a $1.5bn component plant near Chennai in Tamil Nadu to make display modules for iPhones, according to the FT’s latest scoop. Although Apple does manufacture outside China in places such as Vietnam and Malaysia, India has emerged as the biggest destination in its efforts to diversify its supply chain. Last month, the FT reported that all US-bound iPhones would eventually be made in India.

For Foxconn, now a leading manufacturer of electronics in India, this is the second big announcement of the month. Last week, the government approved the Taiwanese group’s Rs37bn ($450mn) chip assembly unit at Jewar in Uttar Pradesh, to be set up in collaboration with HCL Technologies. This is India’s sixth semiconductor plant and is expected to create 2,000 jobs. Overall, Foxconn is estimated to be employing some 80,000 people in India.

The Indian government’s efforts to attract large multinational companies to manufacture in India is certainly bearing fruit in the electronics and semiconductor segments, with the government committing an additional $2.7bn to the production-linked incentive scheme for the sector last month. But the scheme has not taken off in other industries such as textiles and pharmaceuticals. When the US president first started his barrage of tariff announcements, there was a hope that India could become a supply hub across various sectors. 

Things have become both clearer and more unpredictable. With the US announcing trade deals with key partners like the UK and China, we have a better idea of the sectors where India might have an opportunity. At the same time, making decisions about capital investment based on Trump’s decisions is always a fraught process, since he is prone to changing his mind. Global trade seems to be now operating in 90-day cycles based on unpredictable levy reprieves. Instead, the non-electronics export sectors are looking to India’s own trade deals with large partners to see where the potential growth markets lie. 

“China plus one” is a great strategy on paper. But for it to really work, we will need big companies to stand up to Trump’s threats. So far, only Apple seems to be holding its ground. 

Source: https://www.ft.com/content/7fdb8aaa-9296-4c57-a851-13db560a253f