Foxconn is moving away from the iPhone to electric cars

u09acu09c8u09a6u09cdu09afu09c1u09a4u09bfu0995 u0997u09beu09dcu09bfu09b0 u09aau09beu09b6u09c7 u09abu0995u09cdu09b8 u0995u09a8u09c7 u09b0 u099au09c7u09dfu09beu09b0u09aeu09cdu09afu09beu09a8 u0993 u09aau09cdu09b0u09a7u09beu09a8 u09a8u09bfu09b0u09c u09acu09beu09b9 u09c0 u0987u09dfu09beu0982 u09b2u09bfu0989“”> iPhone maker Foxconn is revamping its business strategy. It plans to shift manufacturing and supply of electronics products from China as well as invest in making electric vehicles. Although changing the business sector is a big risk, the Taiwan-based company does not see any way out in the bitter Washington-Beijing relationship.

The company was started in 1974 as Foxconn or Hon High Technology Group. In the beginning, television knobs or keys were made. Now it is one of the top technology companies in the world, with an annual revenue of 200 billion US dollars. Foxconn makes more than half of Apple’s products—from iPhones to iMacs. Apart from this, it offers products from Microsoft, Sony, Dell and Amazon.

For several decades, this company has earned a reputation by supplying products as per the needs of multinational corporations. The product was designed in the United States and then manufactured in China and sold to various countries and organizations around the world. This is how Foxconn has turned from a small factory into today’s world’s tech-giant.

But Foxconn is in a bit of a bind because of Washington-Beijing’s bitter relationship. Simply put, the company is in danger of being caught in the conflict between the world’s two largest economies.

The US and China are at odds over everything from trade to the war in Ukraine. But the center of the biggest dispute is Taiwan, where Foxconn is headquartered.

Foxconn’s chairman and chief executive, Yang Liu, has highlighted the future of the company in such a context in an interview with the BBC recently.

Yang Liu said the plan to move ongoing production out of China and invest in the electric car manufacturing industry will accelerate the company’s growth in the middle of a decade. US-China relations are deteriorating day by day. So Foxconn has taken this decision keeping in mind the worst possible outcome.

67-year-old Liu said, ‘We hope that the leaders of the two countries will take the decision for peace and prosperity. But as the head of the business, keep in mind the worst outcome.’

China has been claiming Taiwan as its own. As it stands, Beijing could block or even invade the self-governing country at any time.

Business continuity plans” are underway, Liu said. In the meantime, several factories have been moved out of China. In particular, the production of national security equipment has been shifted to Mexico and Vietnam.

The BBC says that by ‘national security’ he probably meant servers made by Foxconn. This product used for data centers around the world may contain ‘sensitive information’.

Detention between two countries
Although the dispute over Taiwan has been going on for a long time, Chinese President Xi Jinping’s call for ‘reunification’ is adding fuel to the conflict. Uncomfortable situations are being created between the two countries. In addition, President Joe Biden is adamant that the United States will not leave if China intervenes or attacks Taiwan.

US politicians and diplomats have also spoken out in favor of Taiwan’s independence. However, the White House has reiterated its position that it maintains diplomatic relations with Beijing, not Taipei.

US Secretary of State Anthony Blinken is scheduled to visit China later this week. Many people are hoping that the situation will be somewhat normal during this visit. But there is also the danger of conflict. According to a US general, there may be a military conflict between the two countries in the next few years.

Shihoko Goto, deputy director of the Asia Program at the Wilson Center in Washington DC, said, ‘The United States and China are engaged in strategic competition. Here, Foxconn wants to do business with both, but ultimately only one will win.’

But Liu doesn’t think it’s that simple. Because the model Foxconn follows of designing from the US and making products in China is long overdue.

“We employ a lot of staff,” Liu said. Most countries, including China, are interested in protecting the interests of their workers. Companies like Foxconn need China because of the huge employment opportunities.’

The West has been urging countries and companies to get out of China to de-risk business. However, this long-term plan to reduce dependence on China has not yet materialized.

“There was pressure from some foreign customers to move production out of China,” Liu said. But that was their decision, not Foxconn’s. The government was under pressure on all those companies. But the final decision has not yet come, they will inform us.

The COVID-19 Challenge
Geopolitics aside, Covid-19 will be the biggest factor for companies deciding to move business out of China. In late 2022, protests and riots erupted at Foxconn’s factory in Zhengzhou due to strict Covid policies, lack of quarantine space, and contamination of the Omicron variant. Many Foxconn workers left the world’s largest iPhone parts factory.

In this regard, Liu said, many people do not know the truth behind the scenes of China shown to the outside world during the corona virus. The cities were left empty of vehicles mainly because of Beijing’s strict covid policy.

However, he admitted that his company should have handled the situation differently, saying, ‘If the same situation occurs again, I will stop production completely. Even if I lose clients like Apple, I will stand by this decision.’

But the success of the company definitely depends on its reputable customers. But here the customers are somehow forced to come to Foxconn. To be clear, Foxconn makes 60 percent of iPhones in China. In addition, Chinese factories make the most essential parts of the iPhone, the camera module, connectors and the back part of the phone.

iPhone on wheels
Liu expects Foxconn’s next foray into electric cars. “Whose car is a big iPhone,” said Liu, pointing to a giant board shaped like a large iPhone. We are very familiar with it.’

Foxconn has already made shiny white electric SUV cars to meet the needs of the middle class around the world. Liu said, ‘We think this is a great opportunity for us. For so long there were only gas or diesel powered vehicle engines (MV) in the world. But we are bringing electric vehicles (EVs), which will surely respond.’

Foxconn expects to capture about 5 percent of the global electric vehicle market in the next few years. They have taken up a big target. The company has produced only a few models so far. But Liu is optimistic that this will lead to success.

Regarding the production of electric cars in different countries of the world, Liu said, ‘It does not make sense to make EVs (electric cars) in one place, regional production for cars is very normal. Foxconn car factories will be in Ohio, Thailand, Indonesia and possibly India.

Abdul Bached via BBC