Foxconn’s recall of more Chinese staff tests Apple’s India push

By Sankalp Phartiyal and Debby Wu

Apple Inc. assembly partner Foxconn Technology Group has recalled about 300 Chinese engineers from a factory in India, the latest setback for the iPhone maker’s push to rapidly expand in the country.

The extraction of Chinese workers from the factory of Yuzhan Technology, a Foxconn component unit, in southern Tamil Nadu state is the second such move in a few months.

Foxconn has started flying in Taiwanese engineers to replace staff leaving, people familiar with the matter said, asking not to be named as the information is private.

Earlier this year, officials in Beijing verbally encouraged regulatory agencies and local governments to curb technology transfers and equipment exports to India and Southeast Asia in what is a potential attempt to prevent companies from shifting manufacturing elsewhere.

It wasn’t immediately clear why the Foxconn workers were sent home, but the move yet again underscores the sway that Chinese technicians and supply chain hold over the manufacturing of high-precision engineered products such as Apple’s iPhone.

The Economic Times earlier reported that Yuzhan’s Chinese staff were leaving. Last month, Bloomberg News reported that Foxconn had asked hundreds of Chinese engineers and technicians to return home from its iPhone factories in India.

The Yuzhan factory makes enclosures, or metal cases, and display modules for older iPhone models and isn’t working on the latest iPhone 17 line as yet. It began production just months ago, and Apple still imports a bulk of its displays, the people said.

Apple and Foxconn representatives didn’t respond to requests for comment.

For now, Apple can step up display imports and lean on other local suppliers for enclosures. But the removal of experienced Chinese staff threatens to dent the US tech giant’s efforts to rapidly localize its supply chain in India.

Apple has taken a conscious decision to work with Indian suppliers and hasn’t brought in any significant Chinese partners to the South Asian country.

Its local partnerships include a growing reliance on conglomerate Tata Group’s electronics manufacturing arm — the only Indian iPhone assembler. While Chinese suppliers have built iPhones for nearly two decades, Indian suppliers sometimes still go through teething problems.

A thaw in the frosty relationship between India and China could help Apple, automakers and other local manufacturers. China has assured India of supplies of rare earth minerals and tunnel-boring machines but discussions are yet to bear results.

Cupertino, California-based Apple is producing all four iPhone 17 models in India ahead of their debut next month, marking the first time that all new variations — including pro-level versions — will ship from the South Asian country from the get-go.