Apple Reportedly Shifting Watch And MacBook Production To Vietnam
Wary of soaring tensions surrounding out-of-favor countries like China, multinational corporations such as Apple are diversifying production to places with less geopolitical risk.
Nikkei Asia spoke to three sources with direct knowledge of Apple’s plans to shift Watch and MacBook production out of China to Vietnam for the first time.
Apple suppliers Luxshare Precision Industry and Foxconn have already piloted a production run of the Watch in northern Vietnam.
The move by Apple is a further win for the Southeast Asian country as it already produces iPads and AirPods.
Two sources told Nikkei Asia that Apple had requested suppliers to set up a MacBook test production line in Vietnam. They said progress in constructing laptop production in the country has been “slow, partly due to pandemic-related disruptions but also because notebook computer production involves a larger supply chain.”
“AirPods, Apple Watch, HomePod and more … Apple has big plans in Vietnam, apart from iPhone manufacturing,” one of the people with direct knowledge of Apple’s plans said. “The components for MacBooks have become more modularized than in the past, which makes it easier to produce the laptops outside of China. But how to make it cost-competitive is another challenge.”
This trend is called “friendshoring.” While it’s a play on “offshoring,” this isn’t about companies moving operations back to the US and Europe, but rather seeking foreign alternatives that retain the benefit of low labor costs but with less international controversy.
Apple’s production diversification comes as the US and China already had an increasingly adversarial relationship before House Speaker Nancy Pelosi’s visit to Taiwan sparked anger with Beijing. The fact is, geopolitical and trade war tensions aren’t going away anytime soon and will only push Apple further away from China. Though reshoring production to the US is unfeasible because of labor costs, maybe robotics can offset some of those costs or perhaps set up shop in Mexico, where there’s abundant cheap labor and healthy demographics.
A recent Rabobank analysis of friendshoring showed that chief beneficiaries would include countries like Vietnam, India, Brazil, Bangladesh, Indonesia, Mexico, Turkey, Egypt, and South Africa.
Apple’s Tim Cook appears to have learned a valuable lesson this year that high exposure of supply chains to China during Beijing’s zero-Covid policies and worsening geopolitical tensions with the West is a dangerous cocktail, and the need to diversify production in a trend dubbed friendshoring is essential for survival in a multi-polar world.