A key supplier to Apple and a dozen other tech giants plans to split its supply chain between the Chinese market and the US, declaring that China’s time as factory to the world is finished because of the trade war.
Hon Hai Precision Industry chairman Young Liu said the company – also known as Foxconn – is gradually adding more capacity outside of China, the main base of production for gadgets from iPhones to Dell desktops and Nintendo Switches. The proportion outside the country is now at 30 per cent, up from 25 per cent last June.
That ratio will rise as the company – the world’s biggest electronics manufacturer – moves more manufacturing to Southeast Asia and other regions to avoid escalating tariffs on Chinese-made goods headed to US markets, Liu told reporters after his company reported financial results.
“No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” Liu said, adding that while China will still play a key role in Foxconn’s manufacturing empire, the country’s “days as the world’s factory are done.”
Intensifying trade tensions between Washington and Beijing have pushed device manufacturers to diversify their production bases away from China, and Liu last year said that Apple’s most prized product, the iPhone, can be made outside China if needed. The two nations remain in trade talks, but Liu’s comments affirm a growing expectation that the China-centric electronics supply chain will fragment over the longer term.