Apple’s Foxconn to invest more in Vietnam to diversify production

Apple supplier Foxconn has pledged to invest an additional $300 million in northern Vietnam to diversify and boost production. The company will expand its facilities in the country, according to a state media report.

As spotted by Reuters (via Tuoi Tre newspaper), The new Foxconn factory will generate 30,000 local jobs. It comes after a report said the company had started testing production of the Apple Watch in the region.

Foxconn, which has been in Bac Giang for 15 years, moved some of its iPad and AirPods production to Bac Giang’s Quang Chau Industrial Park, Tuoi Tre reported. He did not specify what kind of products would be made at the new plant or its capacity. The Vietnamese government said last year that Foxconn had invested $1.5 billion in the Southeast Asian country.

This report shows the importance for Foxconn – and Apple – to diversify production outside of China. With the pandemic and recent shutdowns in the country, having more options to produce its products is essential to avoid supply constraints, while helping to lower prices for Apple.

In May, the the wall street journal reported that Apple has advanced 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 reported in these years on the issue of Apple’s dependence on China and how the company has tried to diversify production into other countries. My colleague Benjamin Mayo wrote a few months ago:

China is also geopolitically risky. Its ongoing clashes with the United States over trade are also problematic.

However, it is difficult for any other country to compete as only China is big enough to meet Apple’s huge ordering needs. It is difficult to find qualified and cheap labor elsewhere. The transition to alternative production hubs like India or Vietnam will be slow and gradual. For Apple, this means that the supply chain for new products (like the AR headset) will likely be primarily based outside of China.

How long do you think it will take for Apple to become less dependent on China and diversify its supply chain to other countries? Share your thoughts in the comments section below.

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