Foxconn’s India Move will Ripple through Supply Chain
After two long decades of jealously watching China rise to become the world’s No. 2 economy, India appears to be finally getting the attention of electronics manufacturers and may be on the cusp of benefitting from OEMs’ unceasing search for lower-cost production centers to boost competitiveness and increase profits.
Foxconn International Ltd. is the latest company to insert India into its manufacturing planning. After a recent visit chairman Terry Guo said Foxconn will shift more manufacturing activities to India and that the company expects to build up to 12 new factories in the country. Guo said he sees huge potential for his company in India and announced Foxconn would invest in Indian technology start-ups over the next years, according to reports.
The Taiwanese electronics manufacturing services (EMS) provider isn’t the first to announce plans for a major investment in India but it may be the one with the longest coattail that’s certain to pull in other players in the supply chain, including semiconductor suppliers, passive component vendors and other hardware manufacturers. Foxconn alone can spark a mini-revolution in the Indian manufacturing sector due to its tendency to source locally – to reduce costs – while also establishing its own vertically integrated production system. Foxconn became a top manufacturer for companies like Apple because of its ability to help them reduce costs by either sourcing locally or making essential subassembly systems itself.
Other companies have preceded Foxconn into India although the results have so far been moderate. Starting at least two decades ago, many technology companies invested in India and helped to push up the country’s profile as a hub for information technology processing but the recent report about Foxconn’s India intentions is likely to represent a major milestone in the country’s evolution into a rival production hub for the electronics industry.