The trade war between the US and China has already started showing effects with Huawei losing Google’s Android support. Trade analysts believe that the situation may get out of hand in the coming weeks, which may turn out to be a problem for Apple Inc. Putting all the speculations to rest, Senior Foxconn exec Young Liu has stated that the company has got “enough capacity” to manufacture US-bound iPhones outside of China if needed. Liu also counts its facility in India as a contributing factor for its plans. The statement comes in light after the US-China trade war churned out major shifts causing disruptions.
Manufacturing Apple iPhones Outside China
Amid the trade war between the two leading economies, manufacturers and brands have been at the receiving end of orders that can set them off-course. It was reported that China recently had a meeting with tech companies asking them not to comply with US orders to avoid adverse effects on their Chinese manufacturing plans. China ostensibly cautioned companies of severe consequences.
In a statement, Liu said, “Twenty-five percent of our production capacity is outside of China and we have enough capacity to meet Apple’s demand in the US market.” Speaking at Foxconn’s first investor conference in Taipei, Liu emphasized how it is ready to handle the worst for Apple. He also cited how Foxconn’s investment in Wisconsin facility would play a significant role in mitigating the crisis.
Investment in Wisconsin by Foxconn is expected to approach $1.4-$1.5 billion with up to 2,000 employees by the end of next year. Since the US market accounts for one in every four iPhones sold globally, it would be vital for Apple to look for alternatives with Foxconn to not let the numbers drop. To fulfill the demand of iPhones in China, Foxconn would require two big production units. For now, it is unclear whether India would gain the status of a major production base for iPhones, but Foxconn is apparently running quality tests for the iPhone XR in its facility located in Chennai, India. Foxconn also has a Wistron plant in Bangalore that manufactures iPhones.
Shifting Manufacturing May Not Solve All the Problems
Citing the growing war between China and the US, companies like Apple must look for alternative plans to keep their manufacturing uninterrupted. Foxconn’s latest statement over the trade war could be a relief for the company as it now seems to have a haven for its US-outbound iPhones. However, this might not solve all the issues that may string together if the trade war gets uglier, and Apple has to shift its manufacturing elsewhere. You see, it is not just about manufacturing but procuring components. It is a known fact that most of the components suppliers for smartphones are based out of China, which means that companies like Apple could suffer a great deal if such suppliers were to cut contracts with them.
In such condition, finding new component suppliers would also set back the production speed. One can only imagine the kind of impact it will have over the upcoming Apple iPhones. Although Foxconn and Apple both will exercise their powers to get out of such a situation, it would still be a lot to deal for them on a speedy timeline.