Foxconn is halting new job rotations for Chinese employees at its Apple iPhone factory in India and will instead send Taiwanese workers, according to five people familiar with Foxconn's India operations. Plans to ship specialized manufacturing equipment from China to India have also been put on hold, these sources said.
Foxconn's factories in the southern states of Tamil Nadu and Karnataka make iPhones as part of Apple's efforts to diversify production away from the Chinese market.
"India also doesn't have the technology to produce the equipment," one of the sources said. Apple and Foxconn did not respond to requests for comment. Chinese and Indian government authorities also did not respond to requests for comment.
If the production suspension continues, it is likely to hamper Apple's larger ambitions to develop the next generation of iPhones in India with its long-time Taiwanese production partner Foxconn. It also highlights the difficulties Apple faces as it tries to shift production from China to other countries amid rising tensions between China and the United States.
Apple has moved production of some of its most advanced iPhone models to India after some factory operations were disrupted by China's 2022 dynamic clearing policy. That kicks off Apple's long process of shifting production centers for its flagship products to reduce its decades-long reliance on China, its second-largest market.
Foxconn started producing iPhones at a factory in Tamil Nadu in 2019, which initially produced older models. Foxconn will begin strengthening its Indian factories and workforce in 2022, and Apple aims to enable India to also produce newer models. The two factories in Tamil Nadu and Karnataka employ tens of thousands of workers.
However, production in India still relies on Chinese workers and a small number of Taiwanese foreign employees, as well as specialized machinery from China. Foxconn and its equipment suppliers have deployed hundreds of managers, engineers and technicians to oversee production and tool maintenance in India.
However, in recent weeks, Chinese Foxconn employees preparing to travel to India have been told to cancel their trips, sources said. Employees who had already obtained visas and tickets were also blocked from traveling, a person familiar with the matter said.
Some Chinese employees currently working in India have been told they must return home by an unspecified date, some sources said. A Foxconn employee said the instruction was given verbally to employees.
To mitigate the possible impact of the shutdown, Foxconn is looking to replace mainland Chinese employees with Taiwanese employees whose travel to India will not be affected, two sources said. Sources at Foxconn said production and export of iPhone semi-finished products from factories in mainland China have also been accelerated to ensure that India can produce enough smartphones during this period.
In 2024, the latest iPhone Pro model was assembled for the first time at the Tamil Nadu factory. According to Bloomberg, in the fiscal year ending in March 2024, Apple assembled US$14 billion worth of iPhones in India through factories operated by Foxconn, Pegatron and India's Tata Group, accounting for about one-seventh of total iPhone production;
Partly due to rising trade tensions between China and the West, many multinational companies that have long relied on China for high-quality, low-cost products have begun to move their production to South or Southeast Asian countries.
Businesses are also concerned that the trend has been accelerated by growing trade-related political hostilities between China and the United States, which began during the first Trump administration and continued through the Biden administration, leading to tariffs and policies that block China's access to advanced technology.
Kyle Chan, a postdoctoral associate at Princeton University who studies industrial policy in China and India, said the Chinese government may be alarmed by the shift of manufacturing to India, which is seen as a geopolitical rival to China.
"Maybe China, like many people, was surprised that Apple moved some iPhone production to India so quickly," he said.
India and China have long had tense relations due to factors such as border disputes that have led to military confrontations and skirmishes on the Sino-Indian border. Harsh V. Pant, professor and vice president for research and foreign policy at the Observer Research Foundation in New Delhi, said that the two Asian giants have fallen into economic competition at the same time, and more and more companies are seeing opportunities in India to replace China because they are restructuring their supply chains.
But India continues to run a trade deficit with China as it ramps up its sophisticated manufacturing capabilities through Prime Minister Narendra Modi's Make In India initiative. Pant said the Chinese government will likely take measures to prevent India from challenging its status as a global manufacturing power and ensure its dominance.
"Underlying tensions will continue to ensure that this economic competition between the two countries will only escalate," Pant said. "Whether or not the Chinese government is directly involved in the outage, many people in India will view it very negatively."