Apple suppliers flee from China, Vietnam is about to become a production center for AirPods, iPads and MacBooks

Tram Ho

According to Bloomberg, Apple suppliers are likely to move production out of China much sooner than previously anticipated. Part of the motivation comes from the desire to avoid the consequences of geopolitical tensions.

AirPods maker GoerTek is one of many businesses looking to locate locations outside of China. Vice President Kazuyoshi Yoshinaga said in a recent interview that the company is investing $280 million in a new factory in Vietnam and is considering expanding into India. GoerTek Vietnam CEO also said that many US technology companies are encouraging manufacturers like GoerTek to move quickly.

“Starting last month, almost every day a lot of customers came to visit us,” said Yoshinaga, sitting at his office in a large industrial complex north of Hanoi.

Amid the US-China geopolitical tensions, many people are beginning to change their views on the decades-old supply chain of the electronics industry. The world’s dependence on one Asian nation has become all too apparent during the pandemic years, after Beijing’s restrictions choked off supplies from phones to cars.

Apple has remained silent about its plans to move out of China, where the giant has built a vast ecosystem centered on companies like GoerTek or Foxconn Technology Group with millions of employees.

According to Bloomberg, nine out of 10 of Apple’s most important suppliers are said to be preparing to move on a large scale to countries like India, thereby creating momentum for the Make in India initiative. Bloomberg Intelligence estimates it could take these companies up to eight years to move 10% of their capacity out of China, but according to the GoerTek CEO, the process will be much quicker.

Many Chinese technology manufacturers are under great pressure. “I can say that currently, 90% of companies are considering the decision,” said a representative of a manufacturer.

Các nhà cung ứng của Apple tháo chạy khỏi Trung Quốc, Việt Nam sắp trở thành trung tâm sản xuất AirPods, iPad và MacBook - Ảnh 1.

Mr. Kazuyoshi Yoshinaga

“Almost every month we get a question from our customers, is the company planning to expand to India?’” Yoshinaga said. “If we build a production line in India, we may have to think very seriously. Currently, the company is focusing on developing production facilities in Vietnam.”

Mr. Yoshinaga told Bloomberg that the new 62-hectare complex in Bac Ninh specializes in manufacturing for major US brands and is expected to come into operation within a year. Previously, GoerTek also committed to invest 1.06 billion USD in factories in Bac Ninh and Nghe An province.

It is known that GoerTek plans to produce virtual reality headsets in Vietnam from 2024, with the hope that this Southeast Asian country will generate more than half of global revenue within 3 years, up from 30% currently. now. Yoshinaga said the company is also asking some suppliers to find new factories in northern Vietnam.

GoerTek started operating in Vietnam a decade ago to produce on-demand orders from Samsung. The supplier currently operates eight factories in the country and expects to double its local workforce to 40,000 as soon as May to fill this year’s Christmas orders.

Thanks to the strength in the coastal port network and the young educated workforce, Vietnam is increasingly becoming an ideal destination. Therefore, many experts believe that Apple may plan to turn Vietnam into a production center for AirPods, iPads and MacBooks.

Các nhà cung ứng của Apple tháo chạy khỏi Trung Quốc, Việt Nam sắp trở thành trung tâm sản xuất AirPods, iPad và MacBook - Ảnh 2.

Apple suppliers flee from China, Vietnam is about to become a production center for AirPods, iPads and MacBooks

According to Mr. Yoshinaga, many US companies are planning to move production chains to Vietnam, despite the costs. India is also a “window of light” in the context of continuous flows outside of China.

Earlier, CNBC also cited the survey results of the American Chamber of Commerce in Shanghai showing that the number of US companies cutting investment in China in 2022 has nearly doubled compared to 2021.

Specifically, 19% of businesses surveyed said they were cutting back on investment in China. This figure in 2021 is 10%. One of the biggest reasons comes from travel restrictions that disrupt supply chains.

According to Todd Simms, vice president of supply chain intelligence platform FourKites, the days of goods are made in China and shipped everywhere. Jose Calamonte, CEO of online fashion brand Asos (UK), also said that products made in China are no longer competitive when it comes to shipping costs.

“The big message is to reduce dependence on China. You don’t want to put all your eggs in one basket,” said Dr Martens CEO Kenny Wilson.

By: Bloomberg, CNBC

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Source : Genk