Why Apple's supplier shifted $330mn investment from India to Vietnam
What's the story
Apple's key Chinese supplier, Luxshare, has reportedly opted to invest in Vietnam over India due to ongoing political tensions between China and India. According to Business Standard (BS), after three years of unsuccessful attempts to expand in India, Luxshare now intends to redirect its $330 million (nearly Rs. 2,750 crore) investment to Vietnam's north province Bac Giang. Vietnam's government recently approved the license for Apple's supplier, bringing the total investment in the country to $504 million (nearly Rs. 4,200 crore).
What Next?
Strained India-China relations derail Luxshare's investment goals
Luxshare, founded by Wang Laichun, originally a Foxconn factory worker, set up its office in India in 2019. In 2020, it planned to purchase a defunct Motorola plant in Tamil Nadu, committing to invest Rs. 750 crore to produce Apple components. However, due to strained India-China relations, its plans to make fresh investments in the country were thwarted.
Insights
Luxshare executives faced visa rejections repeatedly
Insiders informed BS that Luxshare executives faced visa rejections repeatedly in the past year. In 2023, a narrow opportunity arose for Chinese companies, including Luxshare, granting initial clearance under the condition of joint ventures. However, this didn't lead to progress. In May, the company apparently mentioned it would consider investing in India only if assured about the country's business conditions.
Insights
Luxshare's new facility in Vietnam
Luxshare's new facility in Vietnam spanning 72 acres will make cables for smartphones, communication gear, touch phones, smart positioning tags, and smartwatches. The facility is expected to be operational within two years. Last year, BYD, another major Apple supplier in China, encountered a similar outcome as Luxshare when attempting to expand its operations in India.