Pegatron, Apple’s iPhone assembly partner, plans to expand production outside of China and Vietnam is expected as one of the destinations.
“We have been dealing with Covid control measures for the past two months. It’s been unpredictable. So I want to expand our production to Vietnam and some other countries,” said Liao Syh-jang, president and CEO of Pegatron at the group’s annual shareholder meeting, Reuters reported.
Pegatron is one of Apple’s three iPhone manufacturing partners, along with Foxconn and Wistron. Since April, factories in Shanghai and Kunshan (China) have been suspended due to social distancing measures due to Covid-19 control measures. This affects production and delivery to the company’s partners.
So far, China has gradually lifted restrictions. However, Pegatron is still facing a labor shortage due to the covid-19 pandemic.
Liao Syh-jang said expanding production to other regions, including Vietnam, is one of the solutions to overcome labor shortages, the gap between peak and off-peak seasons and increase production capacity.
TH Tung, Chief Strategy Officer of Pegatron said the decision had an impact on Apple as its customers have different reasons for setting up factories in Vietnam, India and Mexico.
One of the reasons is that stakeholders want to reduce production concentration in Shanghai, Suzhou and Chongqing as companies like Pegatron have found it increasingly difficult to hire local labor in China over the past 7-8 years.
Since 2020, Pegatron has started construction of a factory in Hai Phong. A series of Apple’s assembly partners, such as Foxconn, Luxshare and Goertek, also have factories in Vietnam, but there are no factories that have assembled iPhones yet.
As of today, Apple products manufactured in Vietnam include AirPods and HomePod and iPad.
Not only Apple, big giant electronics companies like Samsung, LG and Xiaomi have already set up their factories in Vietnam.
