What Foxconn’s Plant in Bengaluru Means For the City

Foxconn CEO Young Liu has been making the rounds in India.

On Independence Day eve, Liu met with Prime Minister Narendra Modi to discuss the manufacturing giant’s operations in India, particularly in connection with artificial intelligence and semiconductor manufacturing.

The Foxconn CEO also called upon opposition leader Rahul Gandhi, Telangana chief minister Revanth Reddy, and Tamil Nadu chief minister MK Stalin. On Friday, he also met Karnataka chief minister Siddaramaiah, and state large and medium industries minister MB Patil to discuss investment opportunities.

Foxconn already has two plants in Tamil Nadu and Andhra Pradesh. Adding to this, two plants announced in 2023 are currently under development in Bengaluru and Hyderabad, with an expansion coming up for the plant in Chennai.

While the Bengaluru plant was set to begin operations in April this year, there were delays involved with the procurement of land. Despite this, Liu’s meeting with the Karnataka CM spells promising things for both the state and its capital.

What’s Foxconn’s Business With Bengaluru?

This year has been particularly interesting for Foxconn in India. Liu was awarded the Padma Bhushan, the third-highest civilian honour on Republic Day, thanks to the conglomerate’s extensive operations in India.

Receiving Liu in Bengaluru on Friday, Patil said, “Foxconn has extensive investment plans for Karnataka, and this visit is part of detailed discussions related to those plans.” It proved to be quite a fruitful discussion.

For Project Elephant, Foxconn’s nickname for the factory currently being built in Bengaluru, the conglomerate has bought out 300 acres of land in the ITIR Industrial Area in Devanahalli, with a projected total investment of INR 22,000 crore and the creation of 40,000 jobs.

While the factory is being built to manufacture iPhones, with an estimated 20 million units manufactured annually, it still highlights the fact that the company sees Bengaluru as a viable investment opportunity. 

Highlighting this, Siddaramaiah announced that Foxconn would be establishing yet another factory in the city. This time, nicknamed Project Cheetah, the facility will focus on the manufacturing and assembly of mechanical components used for electric vehicles. As part of this, the company has already leased private land within the Bengaluru district.

While India is positioning itself as an all-rounder in terms of manufacturing with campaigns like ‘Made In India’, it’s also projecting itself as an alternative to China when it comes to manufacturing. Bengaluru itself, also known as the Silicon Valley of India, has been using this to its advantage.

The city, and by extension the state, has moved away from being just the hub for several startups, including AI startups. With the recent Foxconn development, the city as a whole has started shifting towards providing the infrastructure needed to provide solid ground to the industries sprouting within, with a drastic shift towards manufacturing.

The manufacturing of iPhones and EV components is just the beginning when it comes to both Foxconn, and other conglomerates, as they eye Bengaluru’s growing talent and resource pool, and openness to investment, as positives for establishing their own factories.

First iPhones, Now EVs. What Next?

The chief minister said it best during his meeting with Liu, “Karnataka has established itself as a powerhouse in the Electronics System Design and Manufacturing (ESDM) sector, contributing significantly to India’s electronics manufacturing output and exports.

“Our state offers a competitive advantage with efficient logistics, reliable power supply, a skilled workforce, and a robust vendor base to support dynamic industries like Foxconn’s.”

This is unsurprising, as in his budget speech earlier this year, the chief minister said that the aim is to lead in attracting investments from the IT/BT, AI automobile and semiconductor industries. “In this field, we will lead the country by example. This is our Kayaka,” he said.

Keeping this in mind, what lies next is open to interpretation. The recent investments add to the growing belief that the Bengaluru-Mysuru hub is being groomed into a semiconductor manufacturing facility.

Earlier, Foxconn had announced a deal with Vedanta to establish a semiconductor manufacturing plant in Gujarat. However, it fell through, with Foxconn later announcing a joint venture with HCL India for a semiconductor outsourced assembly and testing (OSAT) unit.

On the other hand, a similar deal fell through for Mysuru. Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor had planned on setting up a semiconductor chip-making facility in the Tier-2 city, which eventually failed as well.

However, the two failed deals could serve as a major opportunity for both Bengaluru and the conglomerate. It remains to be seen how the discussions with the chief minister will materialise. 

While both Telangana and Tamil Nadu have been mentioned as potential candidates for where the HCL-Foxconn factory will be set, Bengaluru’s inclusion in Liu’s visit strongly suggests that Karnataka may soon get a semiconductor facility of its own.