Young Liu, Chairman of Foxconn, identifies a massive opportunity in the electric vehicles (EV) space. Market estimates project that the global EV market will reach $600 billion by 2025.
With this in mind, the company aims to capture at least five per cent of the market share. In a recent interview with the BBC, Liu emphasized the greater complexity of EVs compared to iPhones. He highlighted that phones typically have about 600 parts, but a typical EV has around 10,000 parts.
Despite competition in branded EVs like Tesla, contract manufacturers are absent in the EV space. However, Foxconn sees great potential in its contract manufacturing business model for entering the EV industry.
Traditionally centred in China, the company has been diversifying geographically and in terms of product range. Geographically, regional manufacturing for EVs is considered natural due to their bulkiness. As a result, Foxconn already has factories in Ohio and has plans for further expansion in Thailand and India.
Prime Minister Narendra Modi even praised Foxconn’s commitment to EV manufacturing in India. The company focuses on two-wheeler electric vehicles, continually building production and R&D capabilities.
They aim to leverage the knowledge gained from two-wheelers to advance R&D for four-wheel EVs. The company’s annual report outlines its intention to establish a production line for two-wheeled electric vehicles in India.
In pursuing their goals, Foxconn may also seek partnerships, similar to their approach in semiconductors, and intends to develop AI technology for four-wheel EVs.
Vedanta and Foxconn Venture
In February 2022, Vedanta and Foxconn announced a joint venture, Vedanta Foxconn Semiconductors Limited (VFSL). Consequently, VFSL plans to establish a fab foundry for manufacturing 28 nm and 40 nm wafers.
VFSL has appointed industry veteran David Reed as the CEO to lead the venture. Notably, Vedanta holds a 63 per cent stake in the semiconductor project, with Foxconn holding the remaining.
According to Anil Agarwal, Vedanta’s representative, Forbes India highlighted their unique partnership arrangement. Under this arrangement, Foxconn will assume operations, sales, and technology responsibility. VFSL has designed its integrated semiconductor fab foundry to have a monthly capacity of 40,000 wafers. These wafers will cater to various sectors, including mobiles, consumer electronics, automotive, and network equipment.
Significantly, this collaboration marks a first-of-its-kind partnership in India’s semiconductor industry. By combining Vedanta’s majority ownership with Foxconn’s technological expertise and operational capabilities, the joint venture aims to establish a successful semiconductor manufacturing enterprise in India.
What Rajeev Chandrasekhar Said
A recent Bloomberg report indicated potential funding concerns from the government for the project. However, Rajeev Chandrasekhar, Minister of State for Electronics and Information Technology, clarified that there is no communication of withdrawal.
According to Chandrasekhar, negotiations are ongoing for the 28-nanometer manufacturing technology. CEO Reed confirmed in recent interviews that the plant’s setup is progressing as scheduled.
The company has also recruited 200-400 engineers for the project. The Vedanta Foxconn joint venture remains committed to advancing semiconductor manufacturing in India.
The government is currently negotiating its involvement and funding support for the project. Both parties are actively engaged in developing the project, which is still a work in progress.
Foxconn’s Global Footprints
Foxconn, known as Apple’s largest contract manufacturer, is now focusing on the mobility sector.
Currently, it has car projects underway with various companies in Taiwan, the US, and Thailand. In November 2022, the company announced a collaboration with the Saudi Public Investment Fund to launch the Ceer EV brand.
Why Companies Are Attracted Towards India
Several factors attract companies to invest in manufacturing facilities in India, including its large consumer market and favourable demographics. The government’s initiatives like “Make in India” further contribute to this trend. According to Deepak Jain, a partner at Bain & Company, India is expected to become a significant EV market by 2030.
The country offers a favourable regulatory environment and strong domestic demand, driving this potential growth. India’s well-established automotive manufacturing sector and talented workforce make it an attractive EV manufacturing hub. Entry of low-cost contract manufacturers will boost electric two-wheeler players striving to scale up.
Foxconn’s entry into the EV market in India aligns with these favourable conditions and market potential. Overall, the mobility sector in India presents a significant opportunity for investment and growth.