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Apple supplier Foxconn to invest $1B in India, sources say
- totalZero 6y agoAs we increase the offshore footprint for manufacturing of devices consumed by Americans, we set ourselves up for a future where our national interests are far away, hard to defend, and subject to the whims of foreign nations. This is a strategic error. India seems like a good counterbalance to China -- it is, after all, an adversary of China in the region. But that could change in 10 years. Geography is important. Instead of diversifying away from our own continent, we should use the power of our consumer demand to establish high-tech manufacturing facilities in the poorer/cheaper reaches of our own continent. We already saw the dangers of offshore production when COVID-19 hit and we were unable to provide basic necessities like patient masks and protective gowns. The lesson there is that far-away manufacturing is problematic when the global market experiences heavy shocks.
- xibalba 6y agoThis assumes that low cost labor is the only necessary condition for an acceptable geography. Likely, it is not. Surely companies such as Apple, with their army of supply chain professionals, has given deep thought to many options, including and beyond what the armchair analysts here on HN can dream up in the 10 minutes this topic catches their fancy.
- pankajdoharey 6y agoAbsolutely, manufacturing requires 1. Cheap Skilled Labour (India has unskilled labour because skilled abour is expensive in India) 2. Mineral Resource (India doesn't even have anthracite deposits for steel production) leave alone oil and other minerals for manufacturing. 3. India does have a good mix of software and other Engineers. I think the best manufacturing countries for expansion out of china are African countries which do have Unskilled labour and Mineral resources. They can hire the rest from outside.
- moreorless 6y agoYou're not alone in this thinking. Chinese corporations have been investing heavily in Africa for quite some time now.
- pankajdoharey 6y agoOfcourse people in the game know much better than a armchair intellectual like me.
- totalZero 6y agoAll of these things are available in spades in South America.
- totalZero 6y agoIn reality, Apple could create a manufacturing ecosystem wherever it wants. The company has spent $100 billion on buybacks annually for several years. This year, it announced it would spend only $50 billion. You never know who the armchair analysts are on HN, so you shouldn't judge their comments based on your own guessed perceptions of their characteristics. That's like a blind ad hominem fallacy.
- nine_zeros 6y agoBut really, is the US the only market out there? Do you think Apple and Foxconn don't want to be closer to the largest markets in Asia?
- mchusma 6y agoIf I were anyone relying on China right now I would diversify to other countries as fast as possible. Everyone should ask: what if I get cut off tomorrow? And have a strategy for that.
- ycombonator 6y agoA lot of CXOs are waiting for the Biden win and hoping for storm to pass so to speak.
- yumraj 6y agoWhich storm will pass? Don’t think Biden winning will change Xi’s or CCP’s behavior?
- summerlight 6y agoThe good old time when businesses could enjoy hundreds of millions of cheap, educated workers won't likely be back; the political stance against CCP is bipartisan while China is seriously turning back to more planned, protective economy. Probably investing into South/Southeast Asia would be a more reasonable option for those CXO, rather than expecting Biden to solve all the structural issues lies between the West and China.
- dicomdan 6y agoBiden just release his Build Back Better plan and it basically puts defence against Chinese espionage and predatory economic practices as a centerpiece.
- NicoJuicy 6y agoI wouldn't know why, everyone if agreeing on acting against China, since HK
- thewhitetulip 6y agoI don't know much of American politics, but from the outside, Trump keeps talking about 'make America great again', so why are CXOs waiting for a Biden win?? I'm sorry if this is a dumb question. I just don't understand it.
- paxys 6y agoAfter their disaster in Wisconsin I'm going to wait till they actually spend the money before considering it newsworthy.
- notRobot 6y agoIndeed. Those who aren't aware can read this article [1] or listen to this brilliant podcast episode from Reply All [2]. [1]: https://www.bloomberg.com/news/features/2019-02-06/inside-wisconsin-s-disastrous-4-5-billion-deal-with-foxconn https://www.bloomberg.com/news/features/2019-02-06/inside-wi... [2]: https://gimletmedia.com/shows/reply-all/wbhjwd/ https://gimletmedia.com/shows/reply-all/wbhjwd/
- kshacker 6y agoJust because US/Wisconsin could not get it done does not mean no one can get it done. USA had much higher costs, even outside of population centers, and too much dependence on tax shelters. It may not be the same in india.
- dirtyid 6y agoIndia is notorious for barriers to entry on top of massive infrastructure deficits. There's promising policy movement in some provinces recently, but historically these initiates have not panned out. There's a reason Superpower2020 is a meme.
- spians 6y agoI mean it happened with the same company just a few months back. Foxconn canceled $5 billion investment plan in India because of a land deal - https://www.gsmarena.com/foxconn_cancels_plans_for_5_billion_investments_in_india-news-40908.php https://www.gsmarena.com/foxconn_cancels_plans_for_5_billion...
- linuxftw 6y agoNever do with tax breaks what you can do with tariffs.
- elongatedMusku 6y agoSriperembethur is a good location. It is close to Chennai port.
- hkmaxpro 6y agoRelated: > The Information wrote on Thursday that at least one Apple supplier has been asked to ship iPhone SE components to a facility in India starting in July > Assembling iPhone SEs in India helps Apple to avoid a 20% tax on imported smartphones, and potentially to gain a greater foothold in the growing market. Apple earns just 2.2% of its global revenue in India https://www.thestreet.com/investing/apple-to-move-iphone-se-production-to-india https://www.thestreet.com/investing/apple-to-move-iphone-se-...
- thewhitetulip 6y agoand yet, for some reason, iPhone SE will be having the same exact cost even if they assembled in India.
- PostThisTooFast 6y agoHuh. They were supposed to invest a boatload in Wisconsin too. Funny how that never seemed to happen.
- harshalizee 6y agoI wonder if this will be the start of an Exodus of manufacturing away from China. Corporations are constantly under scrutiny with their brand messaging and signaling with respect to various conflicts involving China, Hong Kong and the unrest within the United States. India on the other hand, is a Democratic republic, might help alleviate some issues. If India plays its cards right, they may pave the way for a manufacturing revolution for their 1+ billion people. For better or worse, only time will tell.
- pankajdoharey 6y agoManufacturing is not just about cheap skilled labour it is about resources aswell. India lacks both cheap "skilled" labour and mineral resources. They do have low and unskilled labour in high numbers though. Also India is just about as democratic as Putins Russia.
- wow_no 6y agoIndia has enormous mineral resources
- pankajdoharey 6y agoIndias steel production depends on Australian imported Coal, Indias Power production also depends on Imported coal from Australia and neighbourhood countries. India has virtually no Rare earth minerals. Indias has 1μm Semicondictor fab facilities which are good for producing Intel 80386, but nothing above that.
- achow 6y ago>India is just about as democratic as Putins Russia This is first time hearing it. However flawed the elected officials are in India, they do represent the popular sentiments of the population at that time.
- pankajdoharey 6y agoJust to illustrate what am talking about, just yesterday a politically well connected gangster who surrendered got encountered, this same gangster has been seen with the top brass politicians in India including the home minister. https://timesofindia.indiatimes.com/india/vikas-dubey-caught-alive-brought-dead/articleshow/76901667.cms https://timesofindia.indiatimes.com/india/vikas-dubey-caught... It is suspected that if he were to be questioned entire nexus with top politicians would have been revealed.
- kodablah 6y ago> With India’s labour cheaper compared with China, and the gradual expansion of its supplier base here, Apple will be able to use the country as an export hub While there are negatives, I appreciate how globalization of manufacturing helps lift poorer economies (albeit it slowly and not always agreeing with the politics of the newly-built middle classes). One might expect manufacturing in mid-Africa in two decades.
- bergstromm466 6y ago> I appreciate how globalization of manufacturing helps lift poorer economies I really think we have to move to a Commons-based peer production paradigm. Ask yourself, would I want to work for Foxconn assembling $1k iPhones for meager pay? [1] And I am not asking you from a hypothetical standpoint where you pretend to be an Indian in the context of the country India. My question is: would you accept a job starting work at Foxconn today, in the place where you are living? If not, why not? I believe the Precariat revolt is imminent. [1] https://www.theguardian.com/technology/2017/jun/18/foxconn-life-death-forbidden-city-longhua-suicide-apple-iphone-brian-merchant-one-device-extract https://www.theguardian.com/technology/2017/jun/18/foxconn-l...
- blackoil 6y agoI work in a high paying plush job. I will also not work in fields growing crops, neither in a call center, not even in a software service company paying me meagre ₹35 lakh/a. But what doed that mean?
- deleted 6y ago[deleted]
- testiness 6y agoIs ₹35 lakh/a that bad? While it's not the top 5%, it still goes a long way, even in Tier 1 cities.
- bergstromm466 6y ago> But what does that mean? It means that you are in the dying Salariat class. “At the top are a plutocracy and an elite, earning rentier incomes and wielding enormous political power. Way below them, in income terms, is a salariat, a shrinking group with employment security and an extensive array of non-wage enterprise benefits such as pensions, paid holidays and medical leave.“ [1] You write: > I will also not work in fields growing crops, neither in a call center, not even in a software service company paying me meagre ₹35 lakh/a Guy Standing’s got you: “If you are in the precariat and become unemployed, and manage to obtain benefits, you face a marginal tax rate of over 80% in taking the sort of low-wage job you are likely to be offered. It may be over 100%. Then you are called rude names if you decline to take such jobs. No member of the salariat would get out of bed if faced by such tax rates, except perhaps to take to the streets to protest. But that is what politicians have forced on the precariat.“ [2] Your comment makes sense and your view from this privileged position is common for the Salariat. If you’re interested to explore further, I love Guy’s work in ‘Plunder of the Commons‘, as well as ‘The Corruption of Capitalism: Why Rentiers Thrive and Work Doesn’t Pay’. Looking at the future, the most compassionate vision I’ve found is described (separately) by Kevin Carson, Arthur Brock and Eric Harris-Braun. They describe an open source world through Commons-based peer production. Together with Holochain currencies (mutual credit and reputation currencies [Ceptr.org]), these things make me feel incredibly inspired and hopeful. [1][2] https://www.weforum.org/agenda/2016/11/precariat-global-class-rise-of-populism/ https://www.weforum.org/agenda/2016/11/precariat-global-clas...
- yalogin 6y agoFoxconn is getting ahead of the curve here. They know its going to happen and so its better they do it and keep the client than letting others get in to the game. Indian consulting companies use the same strategy. They have offices all over the world and actively go to places where the wages are low and set up shop themselves.
- Aperocky 6y agoWell didn't foxconn managed to get Trump to paddle a shovel in Wisconsin and then managed to do almost nothing for years? India shouldn't be happy until the billion dollar is actually invested instead of promised.
- thewhitetulip 6y agoYep. I've been hearing for YEARS that Tesla is starting a gigafactory here. Unless they build one and cars are manufactured in it, I'll not trust anything. Google was supposedly going to invest in a telecon company. It also didn't happen in real life, just in newspapers.
- safog 6y agoGoogle was going to invest in Jio and they were beaten to the punch by Facebook. There was some talk about investments in Airtel but no idea if that had any weight.
- AnthonyMouse 6y agoSerious question: Modern manufacturing, especially for things like electronics, is highly automated and increasingly so. That implies you don't need a lot of labor to do it and what you do need is skilled labor anyway. Lower unskilled labor costs don't seem like a huge advantage there. So what's still keeping it in countries like China and India and not e.g. Minnesota, which would yield a PR advantage and lower transportation costs? I can think of a few reasons in the nature of China devaluing their currency or other countries ignoring pollution, but these seem like illegitimate reasons. They're not a true advantage of China or India, they're perfidious regulatory arbitrage and a failure of US policy to punish cheating or impose the same environmental standards on all manufactured goods sold in the US regardless of country of origin. So are those the only reasons (to which plausible yet unimplemented solutions exist), or is there something else we have to fix?
- bfieidhbrjr 6y agoRegulation. It's not that easy to buy land, build a building, hire and fire people. If this is confusing, try buying some land and building a building. Also the supply chains are all over there so the lead times and communication are vastly better.
- jerrybee 6y agoFoxconn employs about 1.2 million workers in China. In Shenzhen and Chengdu, a combined Foxconn workforce of 500,000 provides labour for Apple Inc. Daily wage is ~$5 per employee. [https://www.facing-finance.org/en/database/cases/working-conditions-in-foxconn-factories-in-china/ https://www.facing-finance.org/en/database/cases/working-con...] Napkin math if you were to move 500k workers to the US and paid them $100 a day instead of $5 a day it would cost you $17B a year. Would be interesting to see how labor per unit is trending to determine if manufacturing is actually getting more automated and at what rate.
- moreorless 6y agoIn what world do you pay a skilled American $12.50/hr? And that is before considering benefits.
- corn13read 6y agoAre they hiring 1 billion people for a month?
- noisy_boy 6y agoWould be interesting to see the politics surrounding this in light of the recent border conflict between India and China and the Indian government's ban on 59 Chinese apps and government contracts to Chinese firms.
- 9nGQluzmnq3M 6y agoSounds like a defensive move to me for both Foxconn and Apple. If the India/China spat escalates and India starts outright banning more "made in China" products, then this is plan B so they can keep selling to India.
- charliebrownau 6y agoMaybe all these "devloping" nations need to set a standard of min wage to $5 dollar per hour - India - Mexico - China - Vietnam etc
- electro_blah 6y agoin other news, suicide rate of India has sky rocketed.
- moreorless 6y agoThis is just stupid. If you're referring to suicides in Foxconn factories, you first need to consider the size of the workforce. The suicide rate at Foxconn factories was, at the time of the report, and is still currently significantly lower than that of the US.
- donedealomg 6y agoAnother reason for China to start a war with India
- brisance 6y agoSomeone help me understand this. If China and India get into a conflict, doesn't that mean each side would be trying to get the other's exports banned? Which means, effectively, Foxconn is handicapping itself?
- harichinnan 6y agoIndia and China recently ended up at war. 20 Indian soldiers died and an undisclosed number of Chinese soldiers died during a primitive battle with Kung Fu sticks and stones. There's an agreement on not using firearms in conflicts and that has held up for some 60 years. There's no reason to believe this would be an all out war anytime soon.
- PostThisTooFast 6y agoReally? This deserves a post of its own!
- thewhitetulip 6y agoit won't be that big. After 1962, Mao was the Chinese Primier and Nehru was Indian PM. Right after the cuban missile crisis was solved, UK and US started dropping military equipment to help India. Mao then did a single handed ceasefire and retreated back to the original places. then a peace summit happened and India China decided to not indulge in a firefight at the border again. And now China had started meddling in Indian affairs, after weeks of tensions, I don't know what Indian govt did, but tensions were de escalated. Yes, sadly, both sides lost lives, but the thing is CCP has now claimed a Russian port of Vladivostok (I read in the news), it has claimed Bhutan, and Ladhak in India and it has always claimed Arunachal Pradesh (India)
- atheist_int 6y agoQuick chime in regarding arms supply post cuban missile and 1962 Sino-China War: While US and UK definitely gave arms to India, they refused to supply advanced machinery and weapons. This is where the Soviets were glad to step in, and henceforth was one of the major reasons why in the latter half of the Cold War the India sort of allied with the Soviets; while the NATO block in general sided with Pakistan (whose really close ally was also China).
- harichinnan 6y agoThere's a pent up demand in India for cheap iPhones. Most of the phones manufactured would be for domestic market. Local manufacturing would provide better pricing to compete with Android market in India.
- deleted 6y ago[deleted]
- jokestir 6y agoWe just don't have the infrastructure for this. Too much red tape. I will believe it when I see it.
- bby 6y agoapple is doing the needful for india.
- ChicagoDave 6y agoWisconsin says, "Hold my beer."
- vishnugupta 6y agoWorth noting that Foxconn assembles iPhone XR in India. It also manufactures Xiaomi phones in Indian plant. https://goo.gl/maps/GDwxEKhaBEJSs7YR7 https://goo.gl/maps/GDwxEKhaBEJSs7YR7 https://www.business-standard.com/article/companies/apple-starts-selling-iphone-xr-assembled-in-foxconn-s-chennai-unit-119102201132_1.html https://www.business-standard.com/article/companies/apple-st...
- dutch3000 6y agosomehow these global corps need to be held to a unified standard with regatds to environmental and human impact as these vary country by country.
- naruvimama 6y agoA lot of people have talked about the weakness in India, but have forgotten the strengths. Outside China, India is one of the largest single market The long term growth rate is expected to be good There is a countrywide GST (similar to VAT) Uber, Amazon, Google are relatively free to be in the market, this is more liberal than in many EU countries Add to that the younger population, surplus labour, tightening global immigration More over India is a new unwritten partner with US, Japan, Taiwan, South Korea - there is plenty of give and take. India has concluded multi billion dollar defence deals with the US. India has made a huge push in infrastructure investments, and building several industrial corridors India has a strategic location in the ocean India is the only big power in the region that can kick the CCP's ass if it has to, and the Chinese have been testing it out several times Since the coronavirus, the state of UP (200 million population) has relaxed all labour laws that was preventing employment generation and investment, has aggregated government land for new industrial setup, twice the size of Luxembourg.
- komocsi 6y ago> Outside China, India is one of the largest single market Having a large population (without purchasing power) isn't enough to call a region one of the largest single market in the world. China and India have growing middle class but 95% of their population still have no savings, these people only spend on food and household. The largest single market in the world is the European Economic Area, the second largest is the United States (+ Canada and Mexico), all other markets are incomparable from these two developed markets because the difference is so large.
- naruvimama 6y agoYou are very right. It is true from the value point of view and for now. There are two other actions at play here 1. When you are buying a new car or a house in the developed world it is usually replacing an existing car or house, perhaps with a marginal increase in efficiency. In the case of India you are adding an asset which adds close to 100% value. This also applies to roads, bridges and factories. 2. The number of units sold has a significant value to the company, that is part of the success behind China. That adds economies of scale as well as a ground to innovate for the rest of the world, which is incidentally mostly price sensitive. An iPhone costs more than Rs. 100K, typical budget Android phones are around 5K that is 20x. The investments that foxconn is making is pretty small, includes equipment moved from China to diversify.
- sizzle 6y agoI'm surprised big companies haven't built up India to make it's own type of Shenzhen there. Seems like a huge investment by any forward looking metric. They already outsource a lot of software development.
- nine_zeros 6y agoLand acquisition in India is a grand legal process going into years and property rights are individual. This is unlike major portions of China where the CCP can simply takeover land and property is leased out by the government on long term deals. If India truly wants to become a leader, they need to cut red tape in everything but especially in flipping of property.
- imtringued 6y agoThat's something for the government to decide. Individual companies don't have that power.