iPhone manufacturer Foxconn is going to make electric cars
In an exclusive interview, Foxconn chairman and boss Young Liu told the BBC that the company is about to turn around. Foxconn currently derives a significant portion of its revenue from producing iPhones, much of which takes place in China. Given the increasing tensions between China and the US, Foxconn prefers eggs for its money. The company is based in Taiwan: a country that is not recognized by China and therefore already has a turbulent relationship with its western neighbour.
Prepare for worst case scenario
According to Liu, the move is primarily an attempt at risk management. With tensions between China and the US going through the roof, he says Foxconn must prepare for the worst. Despite the doomsday scenario at the back of his mind, Liu tells the BBC that he naturally remains hopeful that both companies will continue to uphold values such as peace and stability.
Taiwan, formerly the Republic of China, was founded by the losers of the Chinese civil war of 1927-1949. For a long time, both countries claimed to be the one and only China. Since the death of Chiang Kai-Shek, the Republic of China has slowly begun to embrace a new identity, that of a state called Taiwan consisting mainly of the island of the same name. The mainland state, too, is far from being the political entity that won the 1949 civil war. Despite this, China continues to present itself as the Communist China of yesteryear, with all the claims that go with it.
When it comes to tensions between China and the US, Taiwan is therefore a standard part, or subject, of the conversation. And so Liu wants to be prepared when his company loses part or even all access to China, or is even invaded by that country. For that reason, the company previously considered moving iPhone production to India. Liu’s fears are certainly well founded. in 2021, Xi Jinping still stressed the need to “reunite” China.
EVs are like iPhones
Foxconn’s current business model is a true classic. Make stuff relatively cheaply in China and sell it in Western markets. He therefore considers it unlikely that the existing production processes will remain profitable if China is kept completely out of the picture. China also has an interest in the employment opportunities that companies like Foxconn provide to Chinese citizens. Therefore, the move is not a complete departure from China. The current production chain is simply too massive to adapt easily. For context, about 60% of all iPhones are made by Foxconn. Foxconn factories in China make the cameras, connectors and housing parts.
According to Liu, there are great similarities between making telephones and making EVs. Liu: “The reason why we think this is a great opportunity for us is because with an internal combustion engine you are mainly talking about mechanical technology. But with EVs you are talking about batteries and electric motors.” And Foxconn knows a lot about that. In a way, Liu sees EVs as just another big iPhone.
Foxconn wants to occupy about 5% of the world market in the coming years. It’s an ambitious goal. Foxconn currently has two prototypes: a crossover SUV and a pickup. Production will not be centralized within one country. According to Liu, production will be spread out in countries such as the US, Thailand, Indonesia and possibly India. For now, the emphasis will remain on the production of iPhones. But the diversification should at least give Foxconn more options going forward.
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