Apple Inc partners Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團) internationally, and Pegatron Corp (和碩) included Southeast Asia in their expansion plans for this year, in a sign major global contract electronics manufacturers would continue to add production capacity outside China to mitigate geopolitical and economic risks.
“We will continue to grow our scale in mainland China, the Americas and Southeast Asia, and these efforts will blossom in 2023,” Hon Hai chairman Young Liu (劉揚偉) told a company event on Sunday.
Smaller rival Pegatron is to allocate US$300 million to US$350 million this year to capital expenditure, partly to grow capacity in Southeast Asia and increase automotive component production in Mexico, company executives told reporters in Taipei on Sunday.
Photo: CNA
Pegatron is also a Tesla Inc supplier.
“Diversification of supply chain is an ongoing trend,” Pegatron co-chief executive officer Johnson Teng (鄧國彥) said.
In addition to producing iPhones in China, Hon Hai and Pegatron make some of Apple’s iconic handsets in India.
Photo: Screen grab from the Internet
Apple is also turning to Vietnam as an alternative manufacturing base for other products including AirPods.
Pegatron is to add capacity in Vietnam and Indonesia, where it already has existing plants, vice chairman Jason Cheng (程建中) said.
The company does not make Apple products in either country.
Hon Hai did not specify which Southeast Asian countries it plans to expand in.
Major contract electronics makers started to significantly build up their manufacturing presence outside China during the former US president Donald Trump era amid the US-China trade dispute.
Some suppliers have been accelerating those diversification efforts amid prolonged COVID-19-induced lockdowns in China that have snarled supply chains.
Meanwhile, Tata Group is close to taking over a major plant in southern India in a deal that would give the country its first homegrown iPhone maker.
The airline-to-software conglomerate has been in talks with the factory’s owner, Taiwan’s Wistron Corp (緯創), for months, and is looking to complete the purchase by the end of March, two people familiar with the process said.
The two firms discussed various potential tie-ups, but talks have now centered on Tata taking a majority of a joint venture, the people said.
Tata is set to oversee the main manufacturing operation, with support from Wistron, the people said, asking not to be named because the plans are not public.
The move would advance India’s efforts to create local contenders to challenge China’s dominance in electronics.
The Indian conglomerate aims to complete a due diligence process by March 31 so that its Tata Electronics arm can formally take over Wistron’s position in a program that gives it government incentives, one of the people said.
The next cycle of incentives is to begin from April 1, which marks the start of India’s financial year.
The acquisition could value Wistron’s only iPhone manufacturing operation in India at more than US$600 million if the Taiwanese company meets the requirements to receive the expected incentives for the current financial year, one of the people said.
Wistron has sought to diversify its business beyond thin-margin iPhone manufacturing into areas such as servers, agreeing to sell its iPhone production business in China to a competitor in 2020.
The company’s 204,000m2 factory is located just more than 50km east of Bengaluru. If the acquisition goes through, Tata would take over all its eight iPhone lines, as well as the plant’s 10,000 workers, including a couple thousand engineers.
Wistron would continue as a service partner for iPhones in India.
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