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Last Updated : Aug 13, 2020 02:23 PM IST | Source: Moneycontrol.com

China's time as world's manufacturing hub is over, Apple supplier Foxconn's co-chairman says in report

China will, however, continue to play a crucial role in Foxconn’s manufacturing empire, said company's Co-Chairman Young Liu.

iPhone maker Apple and a supplier to a dozen other tech giants Foxconn's co-chairman has said that China's time as a factory to the world is over due to the United States-China trade war.

Young Liu has said that the company is gradually adding more capacity outside of China, which is presently the main base of production for gadgets from iPhones to Dell desktops and Nintendo Switches.

The proportion outside the country is now up by 5 percent from the earlier from 25 percent last June. The ratio will rise as Foxconn moves more manufacturing to Southeast Asia and other regions to avoid escalating tariffs on Chinese-made goods headed to US markets, Liu said as per a Bloomberg report.


"Doesn't matter if it is India, Southeast Asia or America, there will be a manufacturing ecosystem in each," Liu said. He, however, said that China will continue to play a crucial role in Foxconn’s manufacturing empire.

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"The country’s days as the world’s factory are done," Liu, Chairman of the company formally called Hon Hai Precision Industry Co Ltd,  added.

Foxconn, the world's largest contract electronics manufacturer, reported a better-than-expected quarterly profit on August 13, as rising telecommuting demand amid the coronavirus pandemic offset slowing smartphone sales. Foxconn reported a net profit of Taiwanese $22.9 billion ($778.54 million) for the second quarter ended June.

As per a Reuters report, Foxconn plans to invest up to $1 billion to expand a factory in southern India where the Taiwanese contract manufacturer assembles Apple iPhones. The move, the scale of which has not previously been reported, is part of a quiet and gradual production shift by Apple away from China as it navigates disruptions from a trade war between Beijing and Washington and the coronavirus crisis.

"There's a strong request from Apple to its clients to move part of the iPhone production out of China," one of the sources with direct knowledge of the matter told Reuters.

US President Donald Trump recently announced a sweeping ban on US transactions with Tencent Holdings, the Chinese owner of messaging app WeChat, and Bytedance, which owns the video-sharing app TikTok, citing national security threats.

Under Trump's executive order, any transaction related to WeChat and TikTok would be banned in the United States.

The Trump administration last week also announced the expansion of the "Clean Network" initiative which aims to prevent various Chinese apps and telecom firms from accessing sensitive information on American citizens and businesses, targeting firms like Tencent, Alibaba and Huawei.

The latest blow comes as the relationship between the two powerhouses has nosedived since the outbreak of the coronavirus pandemic.

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First Published on Aug 13, 2020 02:23 pm