iPhone maker Foxconn to switch to cars as US-China tensions soar

iPhone shaper Foxconn is betting large connected electrical cars and redrawing immoderate of its proviso chains arsenic it navigates a caller epoch of icy Washington-Beijing relations.

In an exclusive interview, president and brag Young Liu told the BBC what the aboriginal whitethorn clasp for the Taiwanese firm.

He said adjacent arsenic Foxconn shifts immoderate proviso chains distant from China, electrical vehicles (EVs) are what volition thrust its maturation successful the coming decades.

As US-China tensions soar, Mr Liu said, Foxconn indispensable hole for the worst.

"We anticipation bid and stableness volition beryllium thing the leaders of these 2 countries volition support successful mind," 67-year-old Mr Liu told us, successful his offices successful Taipei, Taiwan's capital.

"But arsenic a business, arsenic a CEO, I person to deliberation astir what if the worst lawsuit happens?"

The scenarios could see attempts by Beijing to blockade Taiwan, which it claims arsenic portion of China, oregon worse, to invade the self-ruled island.

Mr Liu said "business continuity planning" was already nether way, and pointed retired that immoderate accumulation lines, peculiarly those linked to "national information products" were already being moved from China to Mexico and Vietnam.

He was apt to beryllium referring to servers Foxconn makes that are utilized successful information centres, and tin incorporate delicate information.

Foxconn, oregon Hon Hai Technology Group arsenic it is officially known, started disconnected successful 1974, making knobs for TVs. Now it is 1 of the world's astir almighty exertion companies, with an yearly gross of $200bn (£158.2bn).

It is champion known for making much than fractional of Apple's products - from iPhones to iMacs - but it besides counts Microsoft, Sony, Dell and Amazon among its clients.

For decades, it has thrived connected a playbook perfected by multinational corporations - they plan products successful the US, manufacture them successful China and past merchantability them to the world. That is however it grew from a tiny component-making concern to the user electronics elephantine it is today.

But arsenic planetary proviso chains set to souring ties betwixt Washington and Beijing, Foxconn finds itself successful an unenviable spot - caught betwixt the world's 2 biggest economies, the precise nations that person powered its maturation until now.

The US and China are astatine loggerheads implicit galore things, from commercialized to the warfare successful Ukraine. But 1 of the biggest imaginable flashpoints is Taiwan, wherever Foxconn is headquartered.

Taiwan has been a thorny contented for a agelong clip but Chinese person Xi Jinping's repeated pledges of "reunification" person upset the uneasy presumption quo. Meanwhile, the US, nether President Joe Biden, has been much vocal successful its enactment for Taiwan successful lawsuit of an attack.

There are hopes of a thaw with US Secretary of State Antony Blinken visiting China this weekend. But determination are besides fears of a struggle - 1 US wide has estimated it could hap arsenic soon arsenic the adjacent fewer years.

"The United States and China are engaged successful what we spot arsenic strategical competition," said Shihoko Goto, the lawman manager for the Asia programme astatine the Wilson Center successful Washington DC.

"Foxconn wants to bash concern with both, but determination tin lone beryllium 1 winner."

But Mr Liu does not deliberation it is that simple. For one, helium said, Foxconn's concern model, which relies connected US designs and Chinese manufacturing, is acold from over.

"We prosecute a batch of workers and astir countries, including China, privation to enactment their workers," Mr Liu said, adding that the Chinese authorities wants companies similar Foxconn to support going due to the fact that of the immense fig of jobs they create.

Are rising tensions putting unit connected the model? "So far? We haven't seen it," helium told us.

But the West and its allies person called for countries and companies to "de-risk" from China - a semipermanent displacement to curb planetary reliance connected China that is yet to play out.

When asked if that was impacting business, Mr Liu responded cautiously.

Some overseas clients had pushed to determination accumulation retired of China, helium said, but this was their determination to make, not Foxconn's.

"They get the propulsion from their authorities astir de-risking, and past they volition fto america know."

Geopolitics aside, Covid-19 is different crushed companies mightiness see "de-risking" from China.

A premix of harsh Covid policies, a deficiency of abstraction for quarantine and the infectiousness of the Omicron variant led to protests and riots astatine Foxconn's factory successful Zhengzhou - the world's biggest iPhone works - successful precocious 2022. Hundreds of workers, who feared the dispersed of the virus, fled the field connected foot.

Mr Liu said the scenes that played retired for the satellite to spot were caused by a deficiency of proscription owed to Beijing's unyielding zero-Covid policy.

But erstwhile pressed further, helium admitted that helium should person handled things differently.

"If the aforesaid concern occurs again, I would halt accumulation altogether," helium said, reiterating that helium would person made that determination adjacent astatine the hazard of irking clients similar Apple.

The company's occurrence surely rests connected its awesome lawsuit base, but Foxconn is conscionable arsenic indispensable to those clients.

To recognize however indispensable it is to Apple, for instance, you conscionable request to look astatine however overmuch of the iPhone is made by Foxconn - astir 60%, by immoderate estimates. The factories successful China marque immoderate of the astir indispensable parts of the instrumentality - camera modules, connectors, adjacent the backmost of the telephone casing.

That expertise is besides what Mr Liu is hoping volition substance Foxconn's adjacent large bet: electrical cars.

"Look astatine this - this is simply a large iPhone, truthful we're precise acquainted with this," helium said, pointing to a sheet that controlled the car helium had taken america for a thrust in.

Built for families and priced for an aspiring planetary mediate class, the shiny achromatic SUV is 1 of respective models manufactured by Foxconn.

"The crushed wherefore we deliberation this is simply a large accidental for america is that with the accepted state engine, you person engines which are mostly mechanical. But with EVs, it's batteries and motors," helium explains.

That is simply a acquainted connection for a exertion institution similar Foxconn, helium added.

Foxconn's hopes to seizure astir 5% of the planetary electrical conveyance marketplace successful the adjacent fewer years - an ambitious people fixed the steadfast has lone made a fistful of models truthful far. But it is simply a gamble that Mr Liu is assured volition wage off.

"It doesn't marque consciousness for you to marque [EVs] successful 1 place, truthful regionalised accumulation for cars is precise natural," helium added. Foxconn car factories volition beryllium based successful Ohio successful the US, successful Thailand, Indonesia and possibly adjacent successful India, helium said.

For now, the institution volition support focusing connected what it does champion - making physics products for clients. But possibly not excessively acold successful the future, Foxconn volition commencement selling its ain cars.

Either way, with the foray into electrical cars, Foxconn is diversifying not conscionable accumulation but besides proviso lines - some of which, Mr Liu believes, clasp the cardinal to the company's future.