Foxconn, the renowned iPhone manufacturer, is making significant investments in electric vehicles (EVs) and restructuring its supply chains as it navigates the increasingly frosty relations between Washington and Beijing.
Foxconn is shifting some of its supply chains away from China, and EVs will drive the company’s growth in the coming decades.
As tensions between the US and China escalated, authorities stressed the need for Foxconn to be prepared for the worst-case scenarios, including the possibility of Taiwan being blockaded or invaded by Beijing.
To ensure business continuity, Foxconn has already begun implementing business continuity planning, with certain production lines related to national security products being relocated from China to Mexico and Vietnam.
Foxconn, officially known as Hon Hai Technology Group, has transformed from a small component-making business into one of the world’s most influential technology companies, with an impressive annual revenue of $200 billion.
Although it is widely recognized for manufacturing a majority of Apple’s products, such as iPhones and iMacs, Foxconn’s client base also includes Microsoft, Sony, Dell, and Amazon.
However, as tensions between the US and China intensify, Foxconn finds itself caught in a challenging position. The two largest economies in the world, which have been instrumental in the company’s growth, are at odds over various issues, including the sensitive matter of Taiwan.
The Chinese government’s repeated calls for ‘reunification’ with Taiwan have unsettled the status quo, while the US, under President Joe Biden, has expressed increased support for Taiwan in the event of an attack.
Budding geopolitical challenges, the ongoing COVID-19 pandemic has provided further impetus for companies to consider diversifying away from China.
The strict COVID-19 policies in China, including limited quarantine space and concerns over the highly transmissible Omicron variant, led to protests and unrest at Foxconn’s factory in Zhengzhou in late 2022.
Looking ahead, Foxconn is banking on its expertise in electronics manufacturing to drive its next major endeavor: electric cars.
The company aims to capture around 5% of the global electric vehicle market in the next few years, with plans to establish car factories in the US, Thailand, Indonesia, and potentially India.
While Foxconn will continue to focus on its core electronic product manufacturing business, the foray into electric cars represents a strategic diversification of production and supply lines.