Foxconn Chairman Denies Apple’s Plan to Shift Production away from Mainland China

BEIJING, June 29 (TiPost)— Leader of an Apple’s key supplier denies the U.S. tech giant’s plan to move its supply chain away from mainland China. 

Credit：Visual China

When asked about whether Apple has such plan, Liu Young-way, or Yong Liu, Chairman and CEO of Hon Hai Technology Group (Foxconn), replied “No”, on the sidelines of the 14th Annual Meeting of the New Champions, also known as the Summer Davos Forum, in the coastal city Tianjin in Northern China, reported by the state-backed newspaper Global Times.

Foxconn is betting big on electric vehicle (EV) and redrawing part of its supply chains in face of the risk due to increasing tension between U.S. and China, Liu said in an interview with BBC earlier this month. The Foxconn boss revealed some production lines, particularly those related to national security products, were moving out mainland China to Mexico and Vietnam.

Responding to a reporter’s question about Foxconn’s recent move to de-risk at the Summer Davos Forum, Liu said the so-called de-risk is not de-capacity. He explained the move is to eliminate the risk of management in case of events like earthquake or windstorms, rather than the risk of capacity, therefore, its main goal is not de-risking, but the sustainable development of the company.

In a panel discussion with the theme of the manufacturing resurgence in Asia at the forum, Liu noted the secondary sector, namely processing and manufacturing, plays an irreplaceable and important role in economic development, unlike the primary sector and the tertiary sector, whose roles were undermined by limited resources and uncertainties respectively. As a main force for a stable and prosperous society, the manufacturing industry improves resource utilization and create a wide range of job opportunities, Liu said, adding that China has been the world’s largest manufacturing base, and Asia has the potential to build a regional manufacturing system.

Liu played down the concern that artificial intelligence (AI) could replace jobs. He believes the development of automation and intelligence can improve worker’s efficiency, reduce cost and increase sales, and the workload of Human Resources (HR) can move from the boring work to others, such as to allocate resources. Li called on the government to introduce polices in request for the new development, so as to train workers with sufficient knowledge and skills to manage automated equipments.

Foxconn has attracted much attention as Apple and its partners showed more signs these years to further diversify manufacturing location, or move some producttion out of China. The manufacturer was reported to secure up to 60% of orders to assemble iPhone 15 series, the next flagship that is supposed to release in September. Liu has visited Foxconn factories in Zhengzhou, Chengdu and other places many times since the start of the year.

Liu also made trips to India in February and March, though not entering into any definitive agreements for new investments. Foxconn broke ground on a manufacturing facility with an investment of over $500 million in the southern Asian country in May, just a month after Apple CEO Tim Cook inaugurated the first store there and met the Prime Minister Narendra Modi. The new facility, located in the southern Indian state Telangana, will create 25,000 jobs in the first phase, according to the local government.

Apple was said in April to seek to make India a center to produce iPhones and accessories, after Piyush Goyal, the Commerce and Industry Minister, revealed in January the tech titan was targeting to make 25% of iPhone in India. Bloomberg reported the same month that Apple could work to unprecedentedly produce iPhone 15 in India at the same time as in China, and could assemble a quarter of all iPhones in India by 2025, if the aggressive expansion trend of Foxconn and other suppliers lasts.

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