In CEO Tim Cook’s words, Apple is “working hard to diversify.” To meet this growing demand, the company is dramatically increasing production in India. In a recent statement, Cook highlighted that the company is navigating trade uncertainties between the U.S. and China by enhancing its manufacturing and assembly capabilities in India. Nationally, this shift becomes an important counterpoint to Apple’s overall strategy in recent years to diversify its manufacturing supply chain away from the U.S.
Apple’s biggest competitor, the tech giant, is intensifying its manufacturing push in India. For one, they want to quickly grow beyond iPhones and begin producing displays for other devices, like AirPods. Apple’s largest manufacturer, Foxconn, is already making moves. As part of this joint push, they have jointly committed to setting up a joint venture in the country. This cooperative development agreement will help make Oregon home to the first advanced semiconductor assembly and test (OSAT) facility.
With the establishment of its subsidiary, Hon Hai Technology India Mega Development, Foxconn is betting big. Their plan involved investing $37.2 million to purchase a 40% equity interest in a joint venture with HCL Technologies. The purpose-built factory will be capable of processing up to 20,000 wafers per month. Armed with this capability, it plans to crank out 36 million units per month. This new facility will be critical to testing these new display panel chips that could power all sorts of new Apple devices.
India is losing out today, as it doesn’t have developed state-of-the-art chip manufacturing infrastructure. With all of that in mind, the Foxconn plant will not be going online to begin immediate chip production. The Indian government is fully behind this push. We are talking about fiscal incentives providing for 50% of the capex for companies such as Foxconn paid by the states themselves under their state-controlled semiconductor program.
So far, the Indian government has been bold by allocating up to 1.26 trillion Indian rupees, or about $15 billion. As part of its $10 billion incentive program that started in 2021, this funding will help it site the first three semiconductor plants. With industry stakeholders eagerly anticipating news on the second phase of this program, Union Minister Ashwini Vaishnaw expressed optimism regarding Foxconn’s new facility.
“Once this unit is there, the display panel [manufacturing] will also come to India.” – Ashwini Vaishnaw
In short, Apple is cementing its relationship with India. This user-friendly move would avoid raising device prices even as tariffs go up. In addition, Cook said that the company is expanding its footprint in India. This action would enable them to prevent costly increases in fares and protect their competitiveness in the ever-accelerating global marketplace.
The opening of Foxconn’s OSAT facility is an important milestone in the journey of building India’s semiconductor ecosystem. The Indian government views this project as a major breakthrough towards setting up domestic fabs. These fabs will eventually produce the chips that go into Apple devices. There is a lack of any short-term strategy for chip fabrication. The progress today is setting the stage for significant leaps forward in India’s tech capacity.