Foxconn, the renowned iPhone manufacturer, is placing a significant bet on electric cars while adjusting its supply chains amid escalating tensions between the United States and China. In an exclusive interview, chairman Young Liu discussed the company’s future direction. Despite shifting some supply chains away from China, Liu emphasized that electric vehicles (EVs) will be the driving force behind Foxconn’s growth in the coming decades. With uncertainties surrounding US-China relations, he stressed the need for business continuity planning and acknowledged the potential worst-case scenarios, including a blockade or invasion of Taiwan, where Foxconn is headquartered.
To mitigate risks, Foxconn is already relocating production lines associated with “national security products” from China to Mexico and Vietnam. These products likely include servers used in data centers that may contain sensitive information. Although Foxconn has diversified its client base beyond Apple, manufacturing more than half of the company’s products, it still follows the conventional playbook of designing products in the US, manufacturing in China, and selling worldwide. However, souring ties between the two global economic powers are forcing Foxconn to navigate a challenging position.
The US and China’s ongoing strategic competition, exacerbated by discussions surrounding Taiwan’s status, presents a complex situation for Foxconn. While the company wants to maintain business relations with both countries, the delicate geopolitical landscape demands careful navigation. Liu believes that Foxconn’s business model, which relies on US designs and Chinese manufacturing, is far from over. He expressed confidence in the Chinese government’s support for companies like Foxconn due to the significant number of jobs they create.
Despite calls from the West to “de-risk” from China and reduce global reliance on the country, Liu stated that some overseas clients have initiated moves to relocate production, but these decisions are made by the clients themselves, not by Foxconn. Additionally, the impact of the COVID-19 pandemic has further motivated companies to consider “de-risking” strategies. The protests and riots at Foxconn’s factory in Zhengzhou, triggered by strict COVID-19 policies and concerns about the virus’s spread, highlight the challenges faced by the company in China.
Looking ahead, Foxconn aims to expand into electric cars, leveraging its expertise in electronics manufacturing. Liu showcased a white SUV, emphasizing the familiarity and transferable skills from producing iPhones. With EVs relying on batteries and motors rather than traditional gas engines, Foxconn sees this as a significant opportunity. The company has ambitious plans to capture approximately 5% of the global electric vehicle market in the coming years, with regionalized production in the US, Thailand, Indonesia, and potentially India.
While Foxconn remains focused on its core business of making electronic products for clients, the move into electric cars represents a diversification of both production and supply lines. Liu believes that these strategic moves are key to securing the company’s future success. As Foxconn continues to adapt to evolving geopolitical dynamics and explore new avenues in the automotive industry, its ability to navigate these challenges will shape its trajectory in the years to come.
SOURCE: Ref Image from WE news
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