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Foxconn, Pegatron discussions could bring iPhone production to Mexico

Workers on a Foxconn assembly line.

Apple's assembly partners are reportedly considering the possibility of opening up new factories in Mexico, in what could be an attempt by Apple to diversify its supply chain further away from China.

Apple's famed supply chain largely relies on production taking place in and around China, with the carefully cultivated group of suppliers working in close proximity to assembly partners for efficient construction of Apple products. With continuing threats against its business operations in China, Apple is allegedly seeking to bring more of the work to other areas, mitigating the risk of events such as a redo of the US-China trade war or another global pandemic like COVID-19.

According to sources of Reuters, Apple partners Foxconn and Pegatron are looking into building new factories based in Mexico. Sources with "direct knowledge of the matter" claim it is directly due to major global events causing issues that could have been avoided with supply chain diversification.

While details about local partners remains unknown, two sources claim Foxconn's plans involve the production of iPhones on behalf of Apple from the factory. However, another source said Apple isn't directly involved in proceedings, but that may change down the line.

Foxconn is expected to give a decision on the factory in late 2020, with work on the facility anticipated to start shortly after the choice is made. Foxconn already has five factories in operation in Mexico, producing televisions and servers.

Pegatron is thought to be in discussions with lenders for a new facility in Mexico, that would be used to assemble chips and other components. It is unknown if it is related to Apple products at this time.

The talks of Mexico production follow others in 2020 that point to expanded Apple activity in countries other than China. In India, Foxconn was reportedly pushed by Apple to make a $1 billion investment in India to boost iPhone production in the country, while multiple Apple partners have applied to India's $6.6 billion Production-Linked Incentive Scheme to encourage manufacturing of smartphones.

There has also been discussion of Apple increasing its work in Vietnam, including the rumored 2021 variants of AirPods and AirPods Pro. Apple reportedly visited Luxshare's facility in Vietnam over the summer ahead of alleged iPhone assembly, but issues were apparently found with on-site dormitories that allegedly held back Apple approval for the site.