Hon Hai to invest NT$50 billion in India, possibly to make iPhones

Taipei, Nov. 28 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co., also known as Foxconn globally, is planning to invest almost NT$50 billion (US$1.59 billion) in India, the company said late Monday.

In an announcement posted on the Taiwan Stock Exchange, where Hon Hai shares are traded, the company said subsidiary Foxconn Hon Hai Technology India Mega Development Private Ltd. will spend 128.21 billion Indian rupees (about NT$49.96 billion) to build a new plant to "meet its operational needs."

It did not provide any other details, but analysts believed that the company, a major assembler of Apple's iPhones, will use the funds to expand its iPhone production in India by building a plant on its own land in line with the "China plus one" strategy.

The strategy focuses on avoiding investing only in China and diversifying production capacity to other countries amid trade friction between Washington and Beijing.

According to Hon Hai's annual report, the subsidiary was established in November 2015 and registered at an address in Mumbai, in Maharashtra state.

In May, Hon Hai said, the subsidiary spent 3 billion Indian rupees to purchase a piece of land located in the industrial hub of Bengaluru in the southern Indian state of Karnataka, borders Maharashtra.

The subsidiary also spent about US$33.27 million to buy production equipment from Apple Operations Ltd., a move said to be for Hon Hai to roll out the latest iPhone 15 series unveiled in September, the company said in July.

Sources in the Apple supply chain said the new investment will enable Hon Hai to soon enter the new product introduction (NPI) stage for iPhones, the process of taking a product from the initial concept phase through mass production and commercialization.

The sources said Hon Hai was likely to transform its production compound in India into another iPhone production base after doing the same in the Zhengzhou and Shenzhen areas of China.

According to analysts, Hon Hai's production complex in Zhengzhou is responsible for the mass production of iPhones, while its other production hub in Shenzhen is engaged in development and NPI for iPhones.

In a recent research report, Tianfeng Securities Co. analyst Kuo Ming-chi (郭明錤), who is well known for his research notes on Apple and its supply chain, said India is expected to account for 12-14 percent of global iPhone production in 2023 and 20-25 percent in 2024.

Kuo said Apple has put more emphasis on iPhone production in India and plans to begin the NPI process for the next generation of iPhones in the second half of 2024, marking the first time Apple engages in the NPI process outside China.

Meanwhile, Hon Hai said in the announcement on Monday that Foxconn Singapore Pte Ltd, another of its subsidiaries, has spent US$1.54 billion to acquire shares of Foxconn Hon Hai Technology India Mega Development at 10 rupees for one share.

Earlier this month, Hon Hai reported a record third-quarter net profit of NT$43.13 billion, up 11 percent from a year earlier and up 31 percent from a quarter earlier.

Analysts attributed the growth to the debut of the iPhone 15 series as well as a weakening Taiwan dollar.