Bestowing Padma Award to Honour Foxconn’s Young Liu

Premise

The list of 132 Padma awardees on this Republic Day had a unique recipient this time around. Young Liu, the CEO of Foxconn, a Taiwanese company which is the world’s largest contract manufacturer of electronics^[1]. Why unique? On several counts:-^[2]

• The only foreign recipient (leaving aside the NRIs and OCIs who basically are persons of Indian origin).
• The first from Taiwan.

This brief work highlights why honouring Mr. Yong Liu with the second highest civilian award in India has been commendable.

A Word about the Recipient

The CEO is a highly experienced entrepreneur with more than four years of industry experience to his credit. Besides reaching the helm of one of the most valuable companies with an annual revenue of a whopping 6.83 trillion^[3] and standing at No 20th in the Fortune Global 500 companies, the seasoned innovator and businessman has the unique credit of setting up three most successful companies; 1. Young Micro Systems - a motherboard company established in 1988; 2. An IC design company focused on PC chipsets in 1995 and an ASDL design company in 1997^[4].

A Word about Foxconn

Foxconn, established in 1974 as Hon Hai Precision industry Co Ltd trades as ‘Foxconn’ worldwide. The Company’s website states that it is committed to creating a comprehensive smart-living experience. The three verticals in which the company is forging ahead in investment are 1, Electric Vehicles, 2. Digital health and 3. Robotics. Its other interest areas include development of artificial intelligence, semiconductors and next generation communication technologies^[5].

Foxconn India Connect

In recent history, Foxconn- India connect story can be started from 13 Sep 2022 when Foxconn signed a $19.5 billion deal with M/s Vedanta Limited to manufacture (fabricate) semiconductors (chips and display facilities) in India. The fabricating unit had to come up in Ahmedabad Gujarat where the State Govt pitched in to provide subsidies on capital expenditure and electricity^[6].

On 10 Jul 2023 Foxconn announced that it is leaving the $19.5 billion deal with Vedanta. Several reasons were cited in the open source for this outcome. The one which got the maximum traction was voiced by the Indian Govt Sources. According to this, the reason for the demise of the deal was the fact that both Vedanta as well as Foxconn had no prior chip-making experience, they were to source the same from a Technology partner which could not be put in place. The decision to leave was cited as mutual^[7].(not discussed further)

The Indian Govt was quick to revert as the Union Minister for Electronics and Information Technology Mr. Ashwini Vaishnav told reporters that the above unfavourable outcome will not affect India’s semiconductor programme^[8]. It is indeed to the credit of the Govt that it has proven much of what the minister asserted way back in Jul 2023.

Foxconn’s Investments Continued to Build Overtime

Going deeper into history, it reveals that Foxconn is no stranger to India. Its investment journey in India actually began in 2015 when it forged an arrangement with Sony for manufacturing Sony’s Bravia line of TVs and selling the product in India as a contract manufacturer. For this, a plant named Competition Team Technology was established in Chennai which was later moved to Tamil Nadu in 2019^[9].

The more fruitful engagement with Foxconn has been in the I-phone sector. Foxconn is the biggest manufacturer of I-phones in the world with a manufacturing share of a whopping 70%^[10].

Within months of existing the Vedanta deal, Foxconn announced in Sep 2023 that it will quintuple its workforce from around 35-49K then to around 200,000 in three years. This was confirmed by Govt sources^[11]. In Nov/Dec the open sources reported that Foxconn plans to invest more than $1.5 Bn ( later figures revealed as $1.67 Bn) in Apple India limited to meet what was called its ‘operational needs’^[12],^[13].

Foxconn’s China footprint is the world’s largest. The famous I-Phone City spread over 5.6 square km in the Zhengzhou District and employing some 200,000 workers makes half of the world’s I-phones^[14].

Then why this tilt towards India? Multiple reasons are driving this trend. Some of these are stated:-

• Covid blues: China’s Zero Covid policy was most damaging as it decelerated businesses across all sectors. This hit manufacturing businesses the hardest; I-phones cannot be realized with work-from-home.
• China’s growing tensions with US is making business environment unstable and unpredictable. Such tensions have all the elements of military arms race, trade war, spying and espionage. As if this was not enough came the report of an alleged major cyber-attack by China on 31 Jan 2024 targeting US critical infrastructure ( water supply, electric grid, traffic management)^[15]
• Chinese economy is not in good health. Some facts(updated Dec 2023)
  • Jul 2023 and counting Chinese economy entered a period of deflation. Still struggling with the same.
  • A real estate crisis (that accounts for 30% of GDP) continues. The biggest player Evergrande which had filed for bankruptcy in Aug 2023 has been ordered by a Hong Kong court to liquidate. Several other big players are queuing up on the same route^[16].
  • Another serious trouble has been the debt overhang by Chinese State Govts. In 2023 the aggregate local Govt debt had risen to 92 trillion yuan. Several States are at a brink of default^[17].
• What is all this resulting into? Technical companies worldwide are increasingly coming to conclusion that producing in China and exporting abroad is no more sustainable^[18]. Businesses are pulling out their money. In Dec 2023, a Forbes Study reported that according to Beijing’s National Bureau of Statics foreign company’s pulled out some 160 Bn dollars in the last 18 months^[19].

The above developments must be figuring in Young Liu’s India plans; that is the sense of the author.

Of course the Young Liu’s India push on one hand and Foxconn’s founder Terry Gou’s decision to contest the Taiwanese Presidential elections on the other ( with China’s stand on Taiwan as given) angered China no end resulting into slapping a large scale tax-audit of Foxconn operations in China^[20]. This is a vertical by itself and only a linked reference to it was considered relevant to this work, hence not discussed further.

Back to Foxconn and Liu. Catching the thread from the stated Govt approval on 13 Dec 2023 permitting Foxconn to invest an additional $1 bn into its upcoming facility in India^[21] , Foxconn has big plans for India in this win-win situation. It has announced recently that by the year 2025, it will create some 50,000+ jobs in India^[22].

Foxconn and Semicon India

India’s semiconductor Mission goes by the name of Semicon India. It is a bold initiative of the current Govt to boost semiconductor design, development and fabrication of high-end semiconductor chips in India. A part of Digital India Corporation, Semicon India aims to build a vibrant and ecosystem of semiconductors and display systems^[23].

Foxconn backed the India Semiconductor Mission. In fact, sharing the dais with PM Modi during the second edition of Semicon India 2023 at Gujarat on 28th Jul 2023, the Foxconn CEO, Mr. Young Liu famously said, (quote) “LETS DO IT TOGETHER” unquote. He later said – creating an ecosystem for chips in India is for the very brave^[24].

This was the time when Foxconn had just exited from the Vedanta deal. Taking a quick advantage of many an enabling provisions in Semicon 2023 edition, Foxconn submitted a bid for setting up a semiconductor manufacturing plant in India. Mr. Young Liu stated, (quote) “his country (Taiwan) sees India as a trusted and reliable partner whose interests should be bolstered by joint work between the two countries,” (unquote)^[25].

There has been no looking back as Foxconn has walked the talk; 200%. A short glimpse:-

• In Sep 2023 it was reported by Bloomberg that Foxconn was in collaboration with M/s ST Microelectronics, NV for submitting a joint bid for constructing a semiconductor manufacturing plant in India^[26].
• As recent as 18 Jan 2024, Foxconn announced its joint Venture with HCL group in India to set up an Outsourced Assembly and Testing (OSAT) unit in India (location not yet made public). The said OSAT facility will undertake packaging, assembling and testing of foundry-made silicon wafers and converting them into finished semiconductor chips^[27].

What message we are giving to China? May be the following:-

• While we subscribe to One China Policy, there is no hold-barred to taking the Indo-Taiwanese relations to the next level; whether it means participation in security dialogues (the presence of three former Service Chiefs in the Security Conference in Taipei at Katagalan Forum in Aug 2023)^[28],or walking the talk on PM’s Modi’s ‘Act East’ policy in cultivating extensive ties with Taiwan in trade and investment, as also, in developing co-operation in science, technology and environment issues besides fostering better people-to-people exchanges.
• India won’t shy away in honouring and crediting Taiwanese nationals when these bring so much of ‘hope’ to our land.

References

^[1] Padma bhushan to Foxconn CEO Young liu.” At www.theprint.in,” Accessed on 31 Jan 2023
^[2] ibid
^[3] “Foxconn,” at www.en.m [3]. Wikipedia.org. Accessed on 31 Jan 2024
^[4]“Foxconn CEO Young Liu honoured with Padma bhushan, “ at www.m.economictimes.com [4]. Accessed on 31 Jan 2024
^[5]“Home Foxconn Technology Group,” at www.foxconn,com [5]. Accessed on 31 Jan 2024.
^[6]“Vedanta Foxconn sign $20 bn Gujarat chip deal,”at www.timesofindia.com [6]. Accessed on 31 Jan 2024
^[7]“Foxcon-Vedanta deal ends,”at www.ndtv.com [7]. Accessed on 01 Feb 2024.
^[8] ibid
^[9] Makein India : Sony Corp inks pact to manufacture Bravia televisions at Foxconn’s Chenai plant,” at wwwretail.economicstimes.indiatimes.com. Accessed on 02 Feb 2024.
^[10]“Foxconn gets nod to infuse $1 Bn more in Apple india Plant,”at www.livemint.com [8]. Accessed on 02 Feb 2024.
^[11]“Foxconn plans to quintuple investment in India in three years,at www.economictimes.com [9]. Accessed on 02 Feb 2024.
^[12] “Apple I phone maker Foxconn to invest 1.5 billion in India..” at www.cnbc.com [10]. Accessed on 02 Feb 2024.
^[13]ibid
^[14]“How China built iPhone city with billions in perks for apple partners,” at www.nytimes.com [11]. Accessed on 02 Feb 2024
^[15]“Exclusive: US disabled Chinese hacking network targeting crtical infrastructure,” at www.reuters.com [12]. Accessed on 03 Feb 2024.
^[16]“Chinese real estate giant evergrade files for bankruptcy,” at www.timesofindia.com [6]. Accessed on 03 Feb 2024.
^[17]“National debt of China,” at www.en.m.wikipedia.org [13]. Accessed on 03 Feb 2024.
^[18]“the sudden exodus of companies from China,” at www.linkedin.com [14]. Accessed on 03 Feb 2024.
^[19]“More money is leaving China,” at www.forbes.com [15]. Accessed on 03 Feb 2024.
^[20]“What message is China sending with Foxconn’s audit,” at www.english.cw.com.tw [16]. Accessed on 03 Feb 2024.
^[21]10 ibid.
^[22] “i-Phone supplier Foxconn to create 50,000+ jobs in India by 2025,” at www.peoplematters.in [17]. Accessed on 03 Feb 2024.
^[23]“India semiconductor mission,” at www.ism.gov.in [18]. Accessed on 03 Feb 2024.
^[24]“Foxconn backs India’s bid to be chip manufacturing base” at www.timesofindia.com [6]. Accessed on 03 Feb 2024.
^[25]Ibid.
^[26]“Foxconn teams up with STMicro for semiconductor plant in India,” at www.indiatoday.in [19]. Accessed on 03 Feb 2024.
^[27]“Foxconn and HCL plan semiconductor venture in India,” at www.developing [20] telecoms.com. Accessed on 03 Feb 2024.
^[28]Why are three former Indian Military chiefs at a security conference in Taiwan? at www.firstpost.com [21]. Accessed on 04 Feb 2024

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>

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