BEIJING, August 4 (TMTPost)— Apple’s major supplier Hon Hai Technology Group (Foxconn) is still seeking output expansion in India despite regulatory headwinds.

Credit：Visual China

Foxconn is planning to invest almost US$500 million to build two factories in India, and at least one of them will land in Karnataka, a southern Indian state, and produce parts of iPhone and other Apple’s devices, Bloomberg reported, citing people with knowledge of the matter. Foxconn was said not to finalize the exact factory site and could announce the plan of new plants as early as this week.

Apple, Foxconn and Karnataka didn’t respond to the report. Foxcoon was reported earlier this week that it has sealed an initial agreement with government of another southern Indian state Tami Nadu. The Taiwan-based manufacturer was said to agree to spend Rs1,600 crore (US$195 million) to set up a mobile component plant in the state and is expected to create about 6,000 local jobs. Foxconn Industrial Internet Co., Ltd., a Shanghai-listed subisiary of Foxcoon, later dismissed the report. It said the company didn’t inked any investment agreement yet.  

The reported new plants came after Foxconn exited from one of its biggest overseas projects. The company said earlier July that it decided not to proceed with a semiconductor venture with Vedanta Limited, an Indian multinational mining company, without elaborating on the reasons. Volcan and Foxconn signed a pact last year to invest US$19.5 billion to build semiconductor and display production plants in Gujarat, a state along the western coast of India.

Foxconn’s withdrawal was deemed as a punch in face of the Indian government, as the venture is supposed to be India’s first electronic chip manufacturing unit. The Indian government has recognized the importance of semiconductor and given the industry the top priority as it moved forward its “Make in India” initiative, launched in 2014. India has launched several initiatives to promote local semiconductor production, and the venture of Foxconn, as the world’s top contract electronics maker, was treated as a key step toward Modi’s ambitious local chipmaking dream.

Reports in March said Foxconn plans to invest about $700 million to build a new plant for production of iPhone parts and the assembly, located near the airport in Bengaluru, the capital of Karnataka, and considered another new production site in Hyderabad, the capital of southern India's Telangana state, as well as a silicon carbide fabrication plant and packaging facility for its semiconductor business. The top iPhone maker was also said that month to expand production in its existing facility in Chennai, the capital city of Tamil Nadu, aiming to boost iPhone production from about 6 million to 20 million by 2024, and its workers there around tripling to as many as 100,000.

While recent news showed more signs Apple and its suppliers’ pivot from China, Foxconn chairman and CEO Liu Young-way, or Yong Liu denied Apple’s plan to shift away from mainland China. When asked about whether Apple has such plan, Liu replied “No” in June, on the sidelines of the 14th Annual Meeting of the New Champions, also known as the Summer Davos Forum.

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.

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