Cupertino, California: Apple Inc suppliers Foxconn and Pegatron Corp are shifting output to India and Southeast Asia to counter the impact of the current trade war between the United States (US) and China. The move is seen as a pivotal step by suppliers, who have large manufacturing facilities in China, as the tensions between two of the world’s largest economies could escalate costs in the country.
According to a report published by Bloomberg, Foxconn, the world’s biggest electronics contract manufacturer, last week said it will invest over US$200 million in India and Vietnam. Hit by increasing US tariffs on imports from China, Taiwan-based assembler Pegatron Corp said they are shifting output to India and Vietnam, having already moved some manufacturing of networking gear to Indonesia.
Shift to Indonesia already underway
“We have begun shipping from Batam island, Indonesia, in January,” Pegatron Chief Executive Officer Liao Syh-jang told reporters. “Whether the US will decide to go ahead with new tariffs on March 1 will be a key impact on the speed of the company’s further diversification.”
In the global tech supply chain, Taiwan’s largest corporations form a critical connection as they assemble devices from extensive production bases in China. However, the crucial link could change as a result of the rising tariffs.
Shares of Foxconn, also known as Hon Hai Precision Industry, were mostly unchanged. But Pegatron’s shares increased by 2.2 percent in Taipei. Since it will take two years to develop its new plants, Liao said that Pegatron will not be able to mass-produce gadgets in India and Vietnam this year.
Foxconn recently said that it had invested around US$213.5 million into an Indian unit.