Apple is in talks to make Apple Watches and MacBooks in Vietnam for the first time, marking a further win for the Southeast Asian country as the US tech giant aims to diversify production outside of China, the Nikkei Asia reported.
According to Nikkei Asia, Apple suppliers Luxshare Precision Industry and Foxconn have begun trial production of the Apple Watch in North Vietnam with the aim of producing the device outside of China for the first time.
Nikkei Asia said three people with direct knowledge of the matter told her reporter.
So far, outside of China, Vietnam has already been Apple’s main production center in Southeast Asia, producing a wide range of flagship products for the US company, including iPad tablets and AirPods earphones.
The Apple Watch is even more advanced, according to industry experts, who say squeezing so many components into such a small body requires a high degree of technological skill. The production of the device would be a victory for Vietnam as the country tries to further upgrade its technical manufacturing sector.
Apple has also continued to move iPad production to Vietnam after COVID-related lockdowns in Shanghai caused massive supply chain disruptions. BYD of China was the first to help with this shift, although sources told Nikkei Asia that Foxconn is now also helping build more iPads in the Southeast Asian country. Apple is also in talks with suppliers to build test production lines for its HomePod smart speakers in Vietnam, the people said.
On the MacBook front, Apple has asked suppliers to set up a test production line in Vietnam, two sources said. However, progress in moving mass production to the country has been slow, partly due to pandemic-related disruptions, but also because notebook manufacturing involves a larger supply chain, multiple sources said. That network is currently focused on China and very cost-competitive, she added.
“AirPods, Apple Watch, HomePod and more… Apple has big plans in Vietnam aside from iPhone manufacturing,” said one of those with direct knowledge of the situation. “The components for MacBooks have become more modular than in the past, making it easier to manufacture the laptops outside of China. But how to make it cost-competitive is another challenge.”
Apple’s diversification into Vietnam began with AirPods, which went into mass production there in 2020. The earphones were among the first Apple products to move assembly out of China after a trade war broke out between Washington and Beijing under former US President Donald Trump.
The move marked a shift in approach for Apple, which had relied on China for nearly all of its manufacturing needs for decades.
For Vietnam, Apple’s shift — and US-China tensions in general — has been a blessing. The number of Apple suppliers with facilities in the country has risen from 14 in 2018 to at least 22, according to Nikkei Asia’s analysis of Apple’s latest available supplier list and interviews with sources. Many other major electronics manufacturers such as Google, Dell and Amazon have also set up production in Vietnam to diversify outside of China, Nikkei Asia has previously reported.
Eddie Han, a senior analyst at Isaiah Research, told Nikkei Asia that electronics manufacturers are trying to strike a balance amid tensions between Washington and Beijing.
“Geographically, we see major international electronics brands such as Apple and Samsung trying to reduce the reliance on making products in China. But on the other hand, these international players have adopted more China-based suppliers such as Luxshare and BYD for Apple, and Huaqin for Samsung to build more of their products,” said Han. “Those are steps to balance the geopolitical effects.”
“China’s role as the world’s premier factory has been put to the test since the trade war and later its energy and zero-COVID policies,” Han said. “That really makes Vietnam, which is close to China, an ideal destination for many electronics manufacturers as the country gradually expands its supply chain ecosystem.”
Apple, Foxconn and Luxshare did not respond to Nikkei Asia’s request for comment.
