Contract electronics manufacturers Foxconn and Pegatron were tipped to increase investment in Mexican manufacturing as they look to reduce reliance on China due to trade tensions with the US, Reuters reported.

The news agency stated Foxconn was considering building a factory to assemble iPhones, with a decision expected later in the year. A source said talks with the Mexican government were at an early, with a surge in Covid-19 (coronavirus) cases a cause for concern.

But the company sent Reuters a statement flatly denying it planned to increase its investment in Mexico.

Rival Pegatron, also a major supplier for Apple, held discussions with banks about producing components including chips in the country, Reuters stated.

China-based Luxshare Precision Industry, which reportedly announced last month it would acquire two subsidiaries of Taiwan-base Wistron, is also eyeing Mexico.

Reuters reported Foxconn already produces TVs and servers at five sites in Mexico: the news agency backed-up its speculation on a new plant by citing a previous article stating the company was looking to invest up to $1 billion in a factory in India.