Apple has reportedly asked its primary contract manufacturer, Foxconn to move some of the iPad and MacBook manufacturing capacity to Vietnam. The assembly lines are expected to start production early next year. This step was taken by Apple amid the rising trade wars between the US and China in order to diversify its supply chain. Still, this isn’t the first time that Apple products will be assembled in Vietnam; the production of Airpods Pro units had also been started there earlier this year.
As per Reuters’ report, the iPad or Mac models whose assembly lines will be moved to Vietnam haven’t been specified yet, nor has been the proportion of Apple’s production shift. But Nikkei reported early this week that more than 30 percent of Foxconn’s production lines will be moved outside of China.
The Taiwanese device manufacturer is taking all the measures to ensure the success of this operation. On Tuesday, it announced an investment of $270 million in order to set up a new subsidiary named FuKang Technology Co Ltd in Bac Giang province of Vietnam, in order to provide impetus to the Vietnam expansion. As per the Taipei-based research group TrendForce, previously iPads have been assembled only in China, hence this would be the first time that the iPad is assembled outside of China.
Apple has been at the receiving end of tariff threats, as the Trump administration targeted China-made products. As a response, China has also instigated retaliatory tariffs and has a large amount of power over foreign brands and companies operating on its soil. Amid all this chaos, a partial shift to Vietnam may come to Apple’s rescue and may be beneficial even if the Biden administration eases tensions on the Sino-U.S. trade war.
Apart from expanding business in Vietnam, Foxconn is also planning to spend almost $1 billion to set up an iPhone assembly plant in India as “strongly requested” by Apple, also as part of diversification beyond China. For a while now, certain iPhone models have been produced in India, but that was prior to the US-China trade wars, with the only goal being the company meeting local import regulations.
Earlier this year in May, Foxconn founder Terry Gou had advised Apple to move its manufacturing out of China amidst the rising tensions between the US and China. In August, Foxconn’s chairman had told investors that China’s “days as the world’s factory are done.” At that time, Vietnam and India were being considered for the shift, closely followed by Mexico, Indonesia, and Malaysia. As it turns out, Vietnam made the cut being more convenient.
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