Foxconn’s New Venture in Zhengzhou
The heart of Foxconn’s operations lies in Zhengzhou, the capital of Henan province in central China, often referred to as “iPhone City.” This bustling hub is where a vast network of suppliers, infrastructure, and factories converge, employing as many as 250,000 Foxconn workers who are crucial in manufacturing the majority of the world’s iPhones for Apple.
In a significant strategic shift, Foxconn, the Taiwanese electronics powerhouse, is setting its sights on expanding its footprint in Zhengzhou by developing a sprawling new 700-acre campus dedicated to electric vehicle (EV) production. However, a pressing question looms: who will be the customers for these vehicles?
Earlier this year, Apple made headlines by canceling its long-term project aimed at developing electric cars, after investing over $10 billion into the initiative. In contrast, many of Apple’s competitors within China continue to forge ahead in the EV market.
This investment in Zhengzhou is a part of Foxconn’s broader strategy to decrease its reliance on Apple. With the sales of iPhones in China experiencing a notable decline and American device manufacturers gradually shifting some of their operations to other countries, Foxconn finds itself at a crossroads.
Moving forward, Foxconn intends to manufacture electric cars designed and marketed by other companies, mirroring its previous model of producing iPhones for Apple. To date, it has secured orders from Luxgen, a subsidiary of a Taiwanese automotive manufacturer, with plans to produce a limited range of buses and cars.
As Kirk Yang, chairman of private equity firm Kirkland Capital, aptly noted, “They need a breakthrough, which means finding a major customer.” This sentiment underscores the critical need for Foxconn to establish strong partnerships in the automotive sector to ensure the success of its new venture.
