iPhone Manufacturer Foxconn Bets on Electric Cars Amidst US-China Tension
Updated: Jan 5
Foxconn's chairman discusses the company's shift in supply chains and its focus on electric vehicles amidst rising tensions between the US and China.
In an exclusive interview with the BBC, Foxconn's chairman, Young Liu, shared insights into the Taiwanese firm's future plans. While some supply chains are being redirected away from China, Foxconn is placing its growth bets on electric vehicles (EVs) in the coming years.
With escalating tensions between the US and China, Mr. Liu emphasized the need for preparation. He expressed hope for peace and stability but acknowledged the necessity of considering worst-case scenarios. Foxconn has already initiated "business continuity planning," relocating certain production lines, particularly those tied to "national security products," to Mexico and Vietnam.
The company, also known as Hon Hai Technology Group, started as a TV knob manufacturer in 1974. Today, it is a global technology powerhouse with an annual revenue of $200 billion (£158.2 billion), best recognized as a key producer of Apple products, among other prominent clients like Microsoft, Sony, Dell, and Amazon.
Traditionally, Foxconn followed the model of designing products in the US, manufacturing them in China, and distributing them worldwide. However, the souring relations between Washington and Beijing have put the company in a challenging position. As tensions rise, Taiwan, where Foxconn is headquartered, becomes a critical flashpoint.
Caught in the middle, Foxconn aims to do business with both the US and China, but uncertainties loom. Mr. Liu believes the current business model, which relies on US designs and Chinese manufacturing, is far from over. Countries like China want to support their workers, including those at Foxconn, due to the significant employment opportunities they generate.
While some overseas clients have expressed interest in moving production out of China, Mr. Liu clarified that it is ultimately their decision, not Foxconn's. The broader context of geopolitical shifts and the impact of the COVID-19 pandemic also contribute to considerations of "de-risking" from China.
Foxconn faced challenges during the pandemic when protests erupted at its factory in Zhengzhou, the world's largest iPhone plant, due to Covid-related policies and the contagious Omicron variant. Reflecting on the incidents, Mr. Liu admitted that he should have halted production to ensure worker safety, even at the risk of displeasing clients like Apple.
Beyond its existing client base, Foxconn aims to become a significant player in the electric vehicle market. Leveraging its expertise in technology manufacturing, the company is developing electric car models. Mr. Liu highlights the advantages of EVs, which rely on battery and motor technology—familiar terrain for Foxconn.
With ambitions to capture approximately 5% of the global electric vehicle market, Foxconn plans to establish car factories in the US, Thailand, Indonesia, and potentially India. While continuing to excel in electronic product manufacturing, the company is diversifying its production and supply lines to secure its future success.
Foxconn is shifting supply chains away from China while focusing on electric vehicles (EVs) for future growth.
Business continuity planning includes relocating production lines to Mexico and Vietnam.
Foxconn is a key technology company known for producing Apple products, among others.
Rising tensions between the US and China put Foxconn in a challenging position.
Foxconn aims to continue its business model based on US designs and Chinese manufacturing.
The company acknowledges the need for "de-risking" from China due to geopolitical shifts and the impact of COVID-19.
Foxconn plans to enter the electric vehicle market and aims to capture 5% of the global market share.
The company's car factories will be located in the US, Thailand, Indonesia, and potentially India.
Foxconn believes diversification in production and supply lines is crucial for its future success.