Apple supplier Foxconn has committed to invest $300 million more in northern Vietnam to diversify and boost production. The company will expand its facility in the country, according to a state media report.
As spotted by Reuters (via Tuoi Tre newspaper), Foxconn’s new factory will generate 30,000 local jobs. This comes after a report indicated that the company started testing the production of the Apple Watch in the region.
Foxconn, which has been in Bac Giang for 15 years, has moved part of its iPad and AirPods production to Bac Giang’s Quang Chau Industrial Park, Tuoi Tre reported. It did not say which type of products would be produced at the new factory or its capacity. The Vietnamese government said last year Foxconn had invested $1.5 billion in the Southeast Asian country.
This report shows the importance for Foxconn – and Apple – to diversify production outside China. With the pandemic and recent lockdowns in the country, having more options to produce its products is key to avoiding supply constraints, while at the same time it helps lower prices for Apple.
In May, the Wall Street Journal reported that Apple had advanced its plans to expand manufacturing outside of China, which also resonates with today’s story, as the vast majority of Apple’s manufacturing takes place in China, at Foxconn and Pegatron facilities.
9to5Mac has been reporting over these years on the issue of Apple’s dependency on China and how the company has been trying to diversify its production to other countries. My colleague Benjamin Mayo wrote a few months ago:
China is also risky geopolitically. Its ongoing clashes with the United States on trade is also problematic.
However, it is hard for any other country to compete, as only China is big enough to meet Apple’s huge order requirements. Finding cheap, qualified, labor elsewhere is difficult. The transition to alternative production hubs like India or Vietnam will be slow and gradual. For Apple, this means the supply chain for new products (like the AR headset) will likely be predominantly based outside of China.
How long do you think will take for Apple to depend less on China and diversify its supply chain to other countries? Share your thoughts in the comments section below.
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