Gerry Palmers Tech 03.14.2022 23:Mar PM EDT

Apple Supplier Foxconn Weary of China, Pivots to Saudi Arabia

Top Apple supplier Foxconn Technology Group, formerly known as Hon Hai Precision Industry Co Ltd, is looking at setting up a facility in the Middle East after it considered "diversifying manufacturing presence" due to rising U.S.-China tensions.

According to a Wall Street Journal report, Foxconn is considering to build a $9 billion multipurpose factory set to manufacture microchips, electric-vehicle components, and other electronics displays. Foxconn is set to use the facility for other product types aside from its current supply chain, as the demand for electronics components and other factory products in other industries has risen in recent years. This includes the booming segment of electric vehicles, which Foxconn is planning to sink its teeth in.

Foxconn uses its facilities around the world to manufacture such Apple products as the iPhone and the iPad. This comes as Apple is expected to release the next generation of the iPhone, the iPhone 14, this fall.

Saudi Arabia Considering Foxconn Offer That Includes Bid for Big Investment Perks

The company first proposed the dual-line facility to be built in Saudi Arabia, which is reviewing the offer. It is also pitching the same project in the United Arab Emirates.

In exchange for setting up a high-tech manufacturing sector in these countries, Foxconn is pursuing such perks as financing, tax holidays, and subsidies for utilities such as power and water, the report added. Saudi Arabia, for its part, had been looking at diversifying its oil-focused economy.

Foxconn itself is seeking to diversify its own production in a bid to protect its business against global events, such as the Ukraine conflict, trade disputes, and the COVID-19 pandemic.

The WSJ report further said that the Saudi government may offer "direct equity co-investment, industrial development loans, low-interest debt from local banks and export credits," which it will pit against other countries Foxconn is considering to build their multipurpose facility.

This is amid Saudi Arabia's push to establish an industrial sector in line with Saudi Crown Prince Mohammed bin Salman's initiative to reshape the kingdom's economy to complement its oil industry, in a world shifting to renewable energy, the report added.

As Saudi Arabia continues to review Foxconn's proposal, it is exercising due diligence and comparing the Foxconn offer against others pitched to other countries. Prince Mohammad will make the final approval before the project in his kingdom proceeds.

The Crown Prince had visited Apple Park a few years ago, meeting with Apple CEO Tim Cook and other company executives, discussing app development education initiatives, investments, and others.

Foxconn Saudi Facility Targeted at Emerging Tech-Focused City of Neom

In a separate Reuters report, Foxconn is looking at building the facility, which known as a "foundry," in the tech-focused Saudi city-state of Neom, which the kingdom is developing in the desert. The Saudi government wants Foxconn to guarantee that it would dedicate at least two-thirds of the facility's production to the company's current supply chain.

Foxconn has been likewise signing large investment deals around the world, including agreements in Taiwan and India. It, however, scaled back on plans to build a $10 billion facility in Wisconsin.