Apple has requested its major supplier Foxconn to move some of its iPad and MacBook production from China to Vietnam, according Reuters. The report cites a supply chain source that Foxconn’s assembly lines are set to start production in the first half of 2021.
This comes as the outgoing administration of US President Donald Trump encouraged US firms to shift their production out of China. Under the Trump administration, the US engaged in a tit-for-tat trade war with China since 2018. The US had targeted made-in-China electronics by placing high import tariffs and restricted the supply of US made components to Chinese firms like Huawei.
The Cupertino based company has long diversified its iPhone production across a number of different countries. In recent years, India has become an important manufacturing centre for Foxconn as it plans to invest USD 1 billion (~RM4.06 billion) to expand its Sriperumbur plant. But as for iPads, Foxconn has only assembled Apple’s iPads in China.
Reuters cites an unnamed Foxconn source that said the manufacturer is building assembly lines to build iPads and MacBooks, though there is no mention of which models, at its plant in Vietnam’s Bac Giang province. It is worth mentioning that, these aren’t the first Apple products to be assembled in Vietnam. Earlier this year Apple started producing AirPods Pro units in the Southeast Asian country.
The report states that Apple requested the move as it was concern about being over-reliant on China as a manufacturing hub. Although tensions between the US and China are likely to ease after Trump leaves office in January, the trade war has acted as a wake-up call to US companies to diversifies its supply chains.
Apple’s contracts with suppliers, like Foxconn, prohibit them from commenting on such reports:
“As a matter of company policy, and for reasons of commercial sensitivity, we do not comment on any aspect of our work for any customer or their products”.
However, there is evidence for the claim as Foxconn recently announced a USD270 million investment to set up a new subsidiary called FuKang Technology Co Ltd that is aimed at supporting the Vietnam expansion.
Apple’s second largest contract manufacturer, Pegatron, is also taking similar measures to further reduce its manufacturing dependence on China by investing an initial USD 150 million (~RM611 million) investment in a new plant in India.