Foxconn: China’s days as world’s factory are over

A key supplier to Apple Inc 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 Co chairman Young Liu said it's 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—known also as Foxconn—moves more manufacturing to Southeast Asia and other regions to avoid escalating tariffs on Chinese-made goods headed to US markets. "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."

The Taiwanese company reported better-thanexpected net income of NT$22.9 billion ($778 million) for the quarter ended in June, boosted by increased demand for iPads and MacBooks.

Foxconn has been shaking up its traditionally China-focused operations. Hon Hai is among Apple assembly partners that plan to expand operations in India, potentially helping the iPhone maker grow its presence in the country of 1.3 billion and shift some of the US company's supply chain outside of China as ties between Washington and Beijing fray.

Chinese rivals are also posing a growing challenge. Local electronics titan Luxshare Precision Industry Co is poised to become the first Chinese homegrown iPhone assembler after sealing a deal in July to buy an Apple handset production plant from Wistron Corp. While Hon Hai will keep assembly orders for premium iPhones, Luxshare will eat into the business for midto-entry-level Apple handsets, Fubon Securities analyst Arthur Liao wrote in a July 23 note.

Foxconn will work on its component business to maintain tech leadership and it also benefits from its long-term relationship with Apple, Liu said in response to analysts' questions about Foxconn's competitive strategy.