
Apple supplier Foxconn to invest $1B in India, sources say - 80mph
https://www.reuters.com/article/us-foxconn-india-apple-exclusive-idUSKBN24B2GH
======
kodablah
> With India’s labour cheaper compared with China, and the gradual expansion
> of its supplier base here, Apple will be able to use the country as an
> export hub

While there are negatives, I appreciate how globalization of manufacturing
helps lift poorer economies (albeit it slowly and not always agreeing with the
politics of the newly-built middle classes). One might expect manufacturing in
mid-Africa in two decades.

~~~
pankajdoharey
Actually I think, the most ideal countries to expand manufacturing to are
African countries, they have some of the same advantages once china had.

1\. Mineral Resources. 2\. Cheap Labour. 3\. High Density of Lanthanide and
Actinide group minerals.

China also has a fourth advantage which is a good mix of Production,
Manufacturing and Electronics Engineers. Which Africa doesn't have. On the
other hand India doesn't have the raw mineral resources required to do long
term manufacturing. For instance India doesn't have the ideal coal quality to
produce steel, India imports 90% of its Anthracite from Australia.

So the ideal situation in my view would be to setup manufacturing hub in
African countries. Hire Chinese/Indian/American/Russian manufacturing
Engineers and the rich mineral resources in African countries. This would fuel
the growth of the world for next few decades. Though one thing to notice
African countries may or may not have the rare earth metals but the
probability if explored is quite high.

~~~
jariel
Those are not in the 'top 10' things required to support an electronics
manufacturing base.

Africa is the last place any electronics are going to be made, and it's
completely unsuitable to their situation, at least currently.

Manufacturing any kind of electronics any scale requires a fair bit of
sophistication. There is a lot of know how in putting together lines, knowing
what to optimise, managing supply chains.

I just got some quotes from various parties, they all had to have intimate,
Engineering level understanding of the system, they all switched out parts,
recommended alterations. They sometimes use expensive gear. Factories in China
have labour, but they also have educated professionals.

They rely on an entire system of sub-contractors, suppliers etc.

Even before you get to that, in Africa you have:

\- The electricity grid is inconsistent. \- Basic things like water supply,
air conditioning systems, HVAC is inconsistent, let alone trying to support a
proper clean room. \- Vehicle repair and maintenance can be hard. \- Internet
is inconsistent \- Financial system is not fully coherent, financial services
for many things don't exist. \- Physical infrastructure (roads, buildings) is
iffy everywhere. \- Huge amounts of petty theft: things left unlocked will be
stolen. \- Massive corruption, payments to local grafters, police,
politicians. \- Political climate is unstable, politicians may promise
something, never happens, want a 'cut' of your business. \- Legal system
undeveloped, lacking in transparency, commercial courts no well understood. \-
Many apps and services we take for granted don't operate in Africa.

Forget the elevated level of knowledge required to staff the front-office of a
real factory. Even if you could, the concept of 'employment' and 'basic level
of professionalism' is not widespread. Get people to show up consistently, get
them to work together, plan complicated products, communicate with individuals
in a variety of nations.

Bono started a clothing line to specifically have stuff made in Africa, but
even that basic textile effort did not work.

The Chinese invest in African for minerals etc. they bring in their own
workers (why do they do this if African wages are lower?).

Africa is mostly very underdeveloped right across the board in the terms we
understand it. They're not at the level necessary to take on basic
manufacturing. Their hope will be to develop natural resources in an
intelligent way, like Botswana as a great example.

I think Vietnam, Philipenes, eventually Malaysia are more likely suited for
electronics manufacturing, especially because it's going to be driven by
Chinese leadership. Same for India: Foxconn maybe can pull it off, because
they have expansive operational knowledge, there are educated people in India
even if they can't fathom yet how to do that level of work and systems are not
suited to it. India does very well in software - partly because it doesn't
require expansive networks or an 'industrial base', it can grow up from 'small
spots' of talent, with limited dependency on the environs. You can still have
a 'great software shop' surrounded by corruption and degrees of dysfunction,
you can't build electronics manufacturing base like this.

Here is some data on African manufacturing [1], notice it's fairly low level
stuff: plastics, beverage, chemicals, food processing etc..

[1] [https://set.odi.org/wp-content/uploads/2016/04/Export-
Based-...](https://set.odi.org/wp-content/uploads/2016/04/Export-Based-
Manufacturing-in-Africa_Full-paper.pdf)

~~~
sufyanadam
I have to disagree with you on almost all points. I lived in East Africa for
20 years, and my observation of the African people was that their intelligence
was similar to what you'd find anywhere in silicon valley. The problems you
mentioned with financial services was solved way back in 1999 and rivals any
mobile / cashless system anywhere else in the world, and that was long before
things like square came out in the US. Other issues you mentioned such as
electricity and water are the reason why you will find some of the most
innovative people out there. Rather than complain about their inconvenient
lack of opportunities, they think outside the box to achieve whatever they
want to achieve. When everything is handed to you on a silver platter, that is
what causes lower IQs, and when you have less and are constrained, that is
what causes you to innovate. It's amazing to see what some of the makers there
make, even the children, when they have very little, or practically nothing
sometimes.

~~~
cpursley
I don't think people are suggesting folks in Africa have a lower IQ, they're
stating that they have less training an expertise (required for this type of
manufacturing). I guess the big question of this is the case is how to get
people there skilled up. I wonder how China did it before becoming a
manufacturing juggernaut.

~~~
paganel
China had a strong and very long tradition of educating the members of its
administration, which I guess counted. There was of course Mao’s Cultural
Revolution that tried to wipe all that tradition off, but it failed miserably.

------
naruvimama
A lot of people have talked about the weakness in India, but have forgotten
the strengths.

Outside China, India is one of the largest single market

The long term growth rate is expected to be good

There is a countrywide GST (similar to VAT)

Uber, Amazon, Google are relatively free to be in the market, this is more
liberal than in many EU countries

Add to that the younger population, surplus labour, tightening global
immigration

More over India is a new unwritten partner with US, Japan, Taiwan, South Korea
- there is plenty of give and take. India has concluded multi billion dollar
defence deals with the US.

India has made a huge push in infrastructure investments, and building several
industrial corridors

India has a strategic location in the ocean

India is the only big power in the region that can kick the CCP's ass if it
has to, and the Chinese have been testing it out several times

Since the coronavirus, the state of UP (200 million population) has relaxed
all labour laws that was preventing employment generation and investment, has
aggregated government land for new industrial setup, twice the size of
Luxembourg.

~~~
rbar
> Since the coronavirus, the state of UP (200 million population) has relaxed
> all labour laws that was preventing employment generation and investment,
> has aggregated government land for new industrial setup, twice the size of
> Luxembourg.

Removing laws that protected the employees will only lead to exploitation. Is
this the only way to entice investors? Factories with suicide prevention nets
is the last thing India needs.

[https://theprint.in/india/governance/up-suspends-labour-
laws...](https://theprint.in/india/governance/up-suspends-labour-laws-what-
stays-what-goes-and-why-it-is-a-step-in-right-direction/417186/)

~~~
nine_zeros
In India, laws of supervision/control == means to acquire bribes.

The more India liberalizes, the easier it is for businesses to operate without
the constant threat of corrupt government or police.

By removing old foolish labor laws, the state can build newer laws from
scratch. Also more economic activity means more jobs. So even if people tend
to lose or be unhappy at current jobs, they can find something else.

------
harshalizee
I wonder if this will be the start of an Exodus of manufacturing away from
China. Corporations are constantly under scrutiny with their brand messaging
and signaling with respect to various conflicts involving China, Hong Kong and
the unrest within the United States. India on the other hand, is a Democratic
republic, might help alleviate some issues. If India plays its cards right,
they may pave the way for a manufacturing revolution for their 1+ billion
people. For better or worse, only time will tell.

~~~
throwaway4425
I think this will depend on how much of an ally they are in the future.

If they are seen as an economic threat, like Japan in the 80s, the media will
probably start to report more on the atrocities committed in Kashmir along
with the new Citizenship Law that appears to target or disadvantaged Muslims.

Vietnam might he another alternative, but they are also a communist country,
so the optics might not be better than China.

~~~
0xFFFE
It is appalling how despite the availability of information online, people
still choose not to verify what they hear on the MSM. Here is the link to the
Citizenship Amendment Act of 2019 on GOI website. It's only a 2 page document.

[http://egazette.nic.in/WriteReadData/2019/214646.pdf](http://egazette.nic.in/WriteReadData/2019/214646.pdf)

It was amended to accommodate persecuted minorities from *neighboring
countries" of India. It has nothing to do with the Citizens of India.

~~~
d3nj4l
This is blatant disinformation by omitting context. The CAA itself _is_
discriminatory, since it does not apply to muslims, but in the context of the
National Register of Citizens
([https://en.wikipedia.org/wiki/National_Register_of_Citizens](https://en.wikipedia.org/wiki/National_Register_of_Citizens))
it becomes even more sinister. The NRC requires people to prove their
citizenship through documentation, which is very difficult for large parts of
India's population, who might be straight up illiterate or lack any kind of
documentation whatsoever. The CAA makes it easier for non-Muslims to claim
citizenship while Muslims slip through the cracks; _that_ is the point of
contention.

~~~
nsenifty
> The CAA makes it easier for non-Muslims to claim citizenship while Muslims
> slip through the cracks; that is the point of contention.

No it doesn't. Here's the relevant part of
CAA([http://egazette.nic.in/WriteReadData/2019/214646.pdf](http://egazette.nic.in/WriteReadData/2019/214646.pdf))
that mentions non-Muslims

> Provided that any person belonging to Hindu, Sikh, Buddhist, Jain, Parsi or
> Christian community from Afghanistan, Bangladesh or Pakistan, who entered
> into India on or before the 31st day of December, 2014

If you are a non-Muslim who wants to get Indian citizenship under CAA, you
must prove (1) you are a citizen of one of these neighboring countries and (2)
you entered India before 2014. It is just not enough to not have papers to
"slip through the cracks".

~~~
thewhitetulip
Dude, you literally are spreading false information and you're literally
quoting one thing on one line and contradicting it on the second line.

CAA makes it easier for non Muslims. you say 'no it doesn't' and then you
literaly cite this:

> Provided that any person belonging to Hindu, Sikh, Buddhist, Jain, Parsi or
> Christian community from Afghanistan, Bangladesh or Pakistan, who entered
> into India on or before the 31st day of December, 2014

Yeah, it specifically mentions Hindu, SIkh Buddhist Jain Parsi Christian. It
leaves out MUSLIMS.

Let's go over. the law specifically excludes Muslims.

What does it mean? it fast tracks citizenship of ALL except MUSLIMS. meaning?
it excludes Muslims

now comes the NRC, in this exercise, in Assam, they asked everyone to prove
their citizenship by showing their grandfather's documents or ancesteral land
documents. grandmother or parents document is not valid because what if your
grandparents are illegal immigrants.

your documents like voter ID was NOT A VALID DOCUMENT FOR CITIZENSHIP because
you have to prove that your GRANDFATHER WAS NOT AN ILLEGAL IMMIGRANT.

Assam NRC took thousands of crores of money to undertake. Just imagine what'll
happen when everyone in India is asked to prove their grandfather's
citizenship.

~~~
nsenifty
Nationwide NRC is different from NRC for Assam.

Nationwide NRC
([https://en.wikipedia.org/wiki/National_Register_of_Citizens](https://en.wikipedia.org/wiki/National_Register_of_Citizens))
is mandated by 2003 Amendment of Citizenship act
([https://en.wikipedia.org/wiki/Citizenship_(Amendment)_Act,_2...](https://en.wikipedia.org/wiki/Citizenship_\(Amendment\)_Act,_2003)).
Look at the definition of illegal migrants there. It doesn't mention anything
about your grandfather's papers.

Assam NRC is an entirely different beast
([https://en.wikipedia.org/wiki/National_Register_of_Citizens_...](https://en.wikipedia.org/wiki/National_Register_of_Citizens_for_Assam)).
This was conducted as part of 2013 Supreme Court order. The entire process and
the rules was prescribed and monitored by the Supreme court of India. The
definition of illegal migrant is a far more stringent here since it hinges on
1971 Bangladeshi refugee crisis and subsequent bloody protests by the Assamese
people.

~~~
rbar
The protest in Assam was/is not to include muslims. But, to exclude all
illegal Bangladeshi immigrants. It seems, from Assam, CAA was brought to give
citizenship to the hindu Bangladeshis that were left out of the NRC conducted
in Assam.

------
paxys
After their disaster in Wisconsin I'm going to wait till they actually spend
the money before considering it newsworthy.

~~~
notRobot
Indeed. Those who aren't aware can read this article [1] or listen to this
brilliant podcast episode from Reply All [2].

[1]: [https://www.bloomberg.com/news/features/2019-02-06/inside-
wi...](https://www.bloomberg.com/news/features/2019-02-06/inside-wisconsin-s-
disastrous-4-5-billion-deal-with-foxconn)

[2]: [https://gimletmedia.com/shows/reply-
all/wbhjwd/](https://gimletmedia.com/shows/reply-all/wbhjwd/)

~~~
kshacker
Just because US/Wisconsin could not get it done does not mean no one can get
it done.

USA had much higher costs, even outside of population centers, and too much
dependence on tax shelters. It may not be the same in india.

~~~
dirtyid
India is notorious for barriers to entry on top of massive infrastructure
deficits. There's promising policy movement in some provinces recently, but
historically these initiates have not panned out. There's a reason
Superpower2020 is a meme.

~~~
spians
I mean it happened with the same company just a few months back.

Foxconn canceled $5 billion investment plan in India because of a land deal -
[https://www.gsmarena.com/foxconn_cancels_plans_for_5_billion...](https://www.gsmarena.com/foxconn_cancels_plans_for_5_billion_investments_in_india-
news-40908.php)

------
mchusma
If I were anyone relying on China right now I would diversify to other
countries as fast as possible. Everyone should ask: what if I get cut off
tomorrow? And have a strategy for that.

~~~
ycombonator
A lot of CXOs are waiting for the Biden win and hoping for storm to pass so to
speak.

~~~
thewhitetulip
I don't know much of American politics, but from the outside, Trump keeps
talking about 'make America great again', so why are CXOs waiting for a Biden
win??

I'm sorry if this is a dumb question. I just don't understand it.

~~~
awakeasleep
Making American Great Again is a threat to the 'capitalist' class of America,
who grow their wealth by avoiding the expense of employing Americans, using
American resources, or materials.

Before everyone downvotes me- I'm not saying that Trump actually follows this
agenda! I'm only sayin thats the style of rhetoric he uses in his campaign.

~~~
thewhitetulip
I understand your point and it is perfectly reasonable. But Trump hasn't
actually interfered in the CXOs life right? they get their massive tax cuts
and all. so I thought they'd be happy with Trump.

------
totalZero
As we increase the offshore footprint for manufacturing of devices consumed by
Americans, we set ourselves up for a future where our national interests are
far away, hard to defend, and subject to the whims of foreign nations. This is
a strategic error.

India seems like a good counterbalance to China -- it is, after all, an
adversary of China in the region. But that could change in 10 years.

Geography is important. Instead of diversifying away from our own continent,
we should use the power of our consumer demand to establish high-tech
manufacturing facilities in the poorer/cheaper reaches of our own continent.

We already saw the dangers of offshore production when COVID-19 hit and we
were unable to provide basic necessities like patient masks and protective
gowns. The lesson there is that far-away manufacturing is problematic when the
global market experiences heavy shocks.

~~~
xibalba
This assumes that low cost labor is the only necessary condition for an
acceptable geography. Likely, it is not. Surely companies such as Apple, with
their army of supply chain professionals, has given deep thought to many
options, including and beyond what the armchair analysts here on HN can dream
up in the 10 minutes this topic catches their fancy.

~~~
pankajdoharey
Absolutely, manufacturing requires

1\. Cheap Skilled Labour (India has unskilled labour because skilled abour is
expensive in India)

2\. Mineral Resource (India doesn't even have anthracite deposits for steel
production) leave alone oil and other minerals for manufacturing.

3\. India does have a good mix of software and other Engineers.

I think the best manufacturing countries for expansion out of china are
African countries which do have Unskilled labour and Mineral resources. They
can hire the rest from outside.

~~~
moreorless
You're not alone in this thinking. Chinese corporations have been investing
heavily in Africa for quite some time now.

~~~
pankajdoharey
Ofcourse people in the game know much better than a armchair intellectual like
me.

------
AnthonyMouse
Serious question: Modern manufacturing, especially for things like
electronics, is highly automated and increasingly so. That implies you don't
need a lot of labor to do it and what you do need is skilled labor anyway.
Lower unskilled labor costs don't seem like a huge advantage there. So what's
still keeping it in countries like China and India and not e.g. Minnesota,
which would yield a PR advantage and lower transportation costs?

I can think of a few reasons in the nature of China devaluing their currency
or other countries ignoring pollution, but these seem like illegitimate
reasons. They're not a true advantage of China or India, they're perfidious
regulatory arbitrage and a failure of US policy to punish cheating or impose
the same environmental standards on all manufactured goods sold in the US
regardless of country of origin.

So are those the only reasons (to which plausible yet unimplemented solutions
exist), or is there something else we have to fix?

~~~
jerrybee
Foxconn employs about 1.2 million workers in China. In Shenzhen and Chengdu, a
combined Foxconn workforce of 500,000 provides labour for Apple Inc. Daily
wage is ~$5 per employee. [[https://www.facing-
finance.org/en/database/cases/working-con...](https://www.facing-
finance.org/en/database/cases/working-conditions-in-foxconn-factories-in-
china/)]

Napkin math if you were to move 500k workers to the US and paid them $100 a
day instead of $5 a day it would cost you $17B a year.

Would be interesting to see how labor per unit is trending to determine if
manufacturing is actually getting more automated and at what rate.

~~~
moreorless
In what world do you pay a skilled American $12.50/hr? And that is before
considering benefits.

~~~
jerrybee
You’re absolutely right, I was being unrealistically conservative. In reality
that many workers would almost certainly unionize and average labor costs
could easily be $250-$300 a day or more.

------
yalogin
Foxconn is getting ahead of the curve here. They know its going to happen and
so its better they do it and keep the client than letting others get in to the
game.

Indian consulting companies use the same strategy. They have offices all over
the world and actively go to places where the wages are low and set up shop
themselves.

~~~
Aperocky
Well didn't foxconn managed to get Trump to paddle a shovel in Wisconsin and
then managed to do almost nothing for years? India shouldn't be happy until
the billion dollar is actually invested instead of promised.

~~~
thewhitetulip
Yep. I've been hearing for YEARS that Tesla is starting a gigafactory here.
Unless they build one and cars are manufactured in it, I'll not trust
anything.

Google was supposedly going to invest in a telecon company. It also didn't
happen in real life, just in newspapers.

~~~
safog
Google was going to invest in Jio and they were beaten to the punch by
Facebook. There was some talk about investments in Airtel but no idea if that
had any weight.

------
brisance
Someone help me understand this. If China and India get into a conflict,
doesn't that mean each side would be trying to get the other's exports banned?
Which means, effectively, Foxconn is handicapping itself?

~~~
harichinnan
India and China recently ended up at war. 20 Indian soldiers died and an
undisclosed number of Chinese soldiers died during a primitive battle with
Kung Fu sticks and stones. There's an agreement on not using firearms in
conflicts and that has held up for some 60 years. There's no reason to believe
this would be an all out war anytime soon.

~~~
PostThisTooFast
Really? This deserves a post of its own!

~~~
thewhitetulip
it won't be that big. After 1962, Mao was the Chinese Primier and Nehru was
Indian PM.

Right after the cuban missile crisis was solved, UK and US started dropping
military equipment to help India.

Mao then did a single handed ceasefire and retreated back to the original
places.

then a peace summit happened and India China decided to not indulge in a
firefight at the border again.

And now China had started meddling in Indian affairs, after weeks of tensions,
I don't know what Indian govt did, but tensions were de escalated.

Yes, sadly, both sides lost lives, but the thing is CCP has now claimed a
Russian port of Vladivostok (I read in the news), it has claimed Bhutan, and
Ladhak in India and it has always claimed Arunachal Pradesh (India)

~~~
atheist_int
Quick chime in regarding arms supply post cuban missile and 1962 Sino-China
War: While US and UK definitely gave arms to India, they refused to supply
advanced machinery and weapons. This is where the Soviets were glad to step
in, and henceforth was one of the major reasons why in the latter half of the
Cold War the India sort of allied with the Soviets; while the NATO block in
general sided with Pakistan (whose really close ally was also China).

------
hkmaxpro
Related:

> The Information wrote on Thursday that at least one Apple supplier has been
> asked to ship iPhone SE components to a facility in India starting in July

> Assembling iPhone SEs in India helps Apple to avoid a 20% tax on imported
> smartphones, and potentially to gain a greater foothold in the growing
> market. Apple earns just 2.2% of its global revenue in India

[https://www.thestreet.com/investing/apple-to-move-iphone-
se-...](https://www.thestreet.com/investing/apple-to-move-iphone-se-
production-to-india)

~~~
thewhitetulip
and yet, for some reason, iPhone SE will be having the same exact cost even if
they assembled in India.

------
vishnugupta
Worth noting that Foxconn assembles iPhone XR in India. It also manufactures
Xiaomi phones in Indian plant.

[https://goo.gl/maps/GDwxEKhaBEJSs7YR7](https://goo.gl/maps/GDwxEKhaBEJSs7YR7)

[https://www.business-standard.com/article/companies/apple-
st...](https://www.business-standard.com/article/companies/apple-starts-
selling-iphone-xr-assembled-in-foxconn-s-chennai-unit-119102201132_1.html)

------
sizzle
I'm surprised big companies haven't built up India to make it's own type of
Shenzhen there. Seems like a huge investment by any forward looking metric.
They already outsource a lot of software development.

~~~
nine_zeros
Land acquisition in India is a grand legal process going into years and
property rights are individual.

This is unlike major portions of China where the CCP can simply takeover land
and property is leased out by the government on long term deals.

If India truly wants to become a leader, they need to cut red tape in
everything but especially in flipping of property.

------
ChicagoDave
Wisconsin says, "Hold my beer."

------
jokestir
We just don't have the infrastructure for this.

Too much red tape. I will believe it when I see it.

------
noisy_boy
Would be interesting to see the politics surrounding this in light of the
recent border conflict between India and China and the Indian government's ban
on 59 Chinese apps and government contracts to Chinese firms.

~~~
9nGQluzmnq3M
Sounds like a defensive move to me for both Foxconn and Apple. If the
India/China spat escalates and India starts outright banning more "made in
China" products, then this is plan B so they can keep selling to India.

------
harichinnan
There's a pent up demand in India for cheap iPhones. Most of the phones
manufactured would be for domestic market. Local manufacturing would provide
better pricing to compete with Android market in India.

------
dutch3000
somehow these global corps need to be held to a unified standard with regatds
to environmental and human impact as these vary country by country.

~~~
amelius
Yes but good luck with that.

Especially since western companies/countries have profited from the exact same
exploitation for so many years already.

~~~
dutch3000
economic localization is the only sustainable way forward

------
electro_blah
in other news, suicide rate of India has sky rocketed.

~~~
moreorless
This is just stupid. If you're referring to suicides in Foxconn factories, you
first need to consider the size of the workforce. The suicide rate at Foxconn
factories was, at the time of the report, and is still currently significantly
lower than that of the US.

