Foxconn has recalled around 300 Chinese engineers from its Yuzhan Technology factory in Tamil Nadu, posing a challenge to Apple’s efforts to grow its manufacturing footprint in India.

The unit, which began operations only months ago, produces metal enclosures and display modules for older iPhone models.

Foxconn is reportedly flying in Taiwanese engineers to fill the gap.

The reason for the recall has not been disclosed, but it highlights Apple’s continued reliance on Chinese expertise for high-precision manufacturing.

This is the second reported recall of Chinese staff from Foxconn’s Indian operations in recent months.

Apple is expanding partnerships with Indian suppliers, including Tata Group, though it still imports most iPhone displays.

For the first time, all four iPhone 17 models will be produced in India, with shipments expected to begin next month.

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🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ China leverages technical expertise as geopolitical tool

The recall of Chinese engineers reveals how technical knowledge has become a strategic asset in geopolitical competition.

Beijing has been verbally encouraging regulatory agencies to curb technology transfers to India and Southeast Asia, representing a coordinated effort to maintain manufacturing advantages1.

This isn’t just about individual companies. It is part of a broader pattern where China uses its deep technical expertise, built over nearly two decades of iPhone manufacturing, as leverage in trade disputes2.

The timing is particularly significant as the Yuzhan factory had just begun production months ago, suggesting these recalls are policy-driven rather than operational decisions1.

China’s strategy effectively creates a technical dependency that’s difficult for companies like Apple to quickly replace, even with substantial investment in alternative locations.

2️⃣ Supply chain diversification proves more complex than anticipated

Apple’s India manufacturing expansion faces persistent structural challenges that go beyond simple facility setup.

Despite years of investment, Apple still aims to shift only 25% of iPhone assembly to India but continues to rely on China for 40% of its manufacturing capacity3.

The company currently imports the bulk of its displays for Indian production and must lean on other local suppliers for basic components like enclosures1.

India’s manufacturing ecosystem remains less mature than China’s, with analysts predicting that India-based iPhone production will stay in the single digits by the end of 2025—far from Apple’s diversification targets3.

The removal of experienced Chinese staff threatens to further slow Apple’s localization efforts, as replacing decades of accumulated manufacturing knowledge requires significant time and resources that even companies with Apple’s scale cannot easily accelerate.

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