Foxconn Likely To Expand Its Chennai IPhone Manufacturing Facility

Apple's contract manufacturer, Foxconn, plans to expand its manufacturing facility in India,

has reported. To this end, Foxconn may add two more buildings at its site near Chennai, people privy to the development told the newspaper.

In addition, Foxconn is also looking to establish a research and development centre in Bengaluru's Whitefield. These developments highlight the company's rapid capacity expansion in India.

The push towards expanding the manufacturing capacity comes when Apple CEO Tim Cook is in the country to launch Apple's first retail stores. Cook launched the Mumbai store on April 18. He is scheduled to launch the Apple store in Delhi's Select City Walk mall in Saket on April 20.

Apple's interest in India signals its growth ambitions in the world's second-largest smartphone market. In March, Foxconn chairman Young Liu visited for the second time in less than a year. He made commitments to drive further investments in the country, the report said.

The person cited above was quoted in the report as saying, "They (Foxconn) broadly indicated that there would be at least two more buildings that they would like to construct to manufacture iPhones. Detailed plans will be submitted later when they seek approvals and clearance."

The two new facilities that Foxconn is likely to build will be in addition to the two other buildings the company already has in place, the ET report added.

Industry experts say that Foxconn's aggressive capacity expansion plans are to support the exports of Apple products from India. Apple has made arrangements so that all its primary suppliers, including Foxconn, Wistron, and Pegatron, have their operations in India. Arguably, this has been done to broaden its supply chain beyond China.

Tamil Nadu has emerged as an iPhone manufacturing hub, with Foxconn and Pegatron managing their manufacturing facilities in the state. In addition, Apple is also outsourcing the manufacturing of its iPhones to Tata Electronics.

The government's production-linked incentive (PLI) scheme has made it easier for smartphone manufacturers to expand their capacities. The scheme intends to develop India into a smartphone manufacturing and exporting hub.

What is the PLI scheme?

A production-linked incentive scheme (PLI) for large-scale electronics manufacturing was announced on April 1, 2020, through a gazette notification. The scheme offers the manufacturers an incentive to boost domestic manufacturing. The government intends to attract large investments in mobile phone manufacturing and specified electronic components, including assembly, testing, marking, and packaging (ATMP) units.

The scheme has drawn global manufacturers, including Samsung, Foxconn, Wistron, and Pegatron. So far, Samsung and Apple have led local manufacturing and met PLI-mandated targets. The government estimates the scheme will pave the way for a total production of Rs 10.5 trillion. More than 60 per cent of this production is expected to be exported.