Foxconn to invest additional $1B in India plant: Report

Taiwan-based electronics manufacturer Foxconn (2354.TW) — Apple's (APPL) main iPhone supplier — secures approval for an additional $1 billion investment into its India plant. This is in addition to initial investment plans of up to $1.6 billion, as reported by Bloomberg. Tech companies increasingly pivot to India for smartphone manufacturing to offset mounting restrictions on China

Yahoo Finance Tech Editor Dan Howley weighs the outcomes for Apple and its future product lines as its supply chain seeks to diversify itself.

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Video transcript

SEANA SMITH: The largest iPhone supplier gaining approval to pour at least $1 billion into its India plant. That's in addition to the $1.6 billion that was already planned. This is all according to Bloomberg. Yahoo Finance's Dan Howley joining us now with the details. And Dan, this is just the latest report here showing that Apple at least seeing India playing a critical role in the company moving forward.

DAN HOWLEY: Yeah. Look, this is just going to be a story that continues to kind of spread across the tech ecosystem. A lot of companies set up in China. They figured there's easy revenue. There there's easy employee regulations so we're going to be able to go in there. But as China has increased the salaries for workers, the tensions with the US have gotten worse, after the pandemic, we saw-- during the pandemic, we saw the shutdowns.

It's all kind of been just a stew for these companies. Not a good one, by the way. This is one that like it's been sitting for a few weeks, so not a great stew. So these companies just want to find a place that is more business-friendly and doesn't have the potential risks that China has to offer. And so they continue to move into India.

By the way, India is the second largest smartphone market in the world outside of China. So they would be able to get more customers there. They would be able to get more workers there. And so that's what we're seeing. It's not exactly as easy as just setting up a new shop in China. You have to deal with infrastructure issues. You have to ensure that you're abiding by the rules set up in different districts in India.

Also part of the reason they're setting up where they originally started setting up the ability to build there was because in order to sell, they needed to do that as well. So now they have that. It's not just India there. We're going to start to see other countries get more action when it comes to building out. And there is a, I believe, a "Wall Street Journal" story that had said by the end of the decade, India itself will be responsible for a quarter of all iPhones made.

Also big thing to point out here is that for the iPhone 15, usually what would happen was Apple would get the products from China and then ship them out. And then the ones in India would come out after that. But in this with the iPhone 15, the ones made from India went out along with the ones from China. There was some backlash from some Chinese citizens who wanted to have only China make the phones. But I mean, look, this is Apple. They're going to do what they're going to do.

SEANA SMITH: They're going to do it they're going to do. And I guess good news here for India just in terms of the amount that has already been poured into the country. And then when you take into account the fact that they want to diversify and hedge their bets here against China likely that we will see more of that. All right. Dan, thank you.