Apple continues to push forward with its China Plus One policy, as Foxconn, Apple’s largest manufacturing partner acquired a new location in Vietnam for a new Apple factory. Foxconn has been investing heavily in India and Vietnam as it moves away from China.
Foxconn Technology Group, Apple’s largest contractor, said it has acquired a new location in Vietnam, as the Taiwanese conglomerate presses ahead with ambitions to relocate further production away from mainland China following massive delays at its primary manufacturing base late last year.
One of the biggest reasons why Foxconn and a number of other tech manufacturing companies are looking to set up shop outside China is because of US’ sanctions, as well as sanctions from its allies. While most of these sanctions are focused on semiconductors and memory modules, tech manufacturing companies expect the effects of the sanctions to roll over to other companies as well.
Foxconn’s new Apple plant in VietnamFoxconn, formerly known as Hon Hai Precision Industry, has signed a lease with Saigon-Bac Giang Industrial Park Corp for around $62.5 million to address “operational demands and enhance manufacturing capacity,” according to an exchange filing on Tuesday.
The facility was rented through Foxconn’s subsidiary Fulian Precision Technology Component Co. at the Quang Chau Industrial Park in Bac Giang province, east of Hanoi. According to the firm, the lease will last until February 2057.
According to Reuters, Foxconn negotiated a US$300 million agreement with a Vietnamese developer last August to establish a new facility in Bac Giang, where it already manufactures iPads and AirPods. The report made no indication of the items that will be manufactured at the new facility.
Foxconn’s latest venture in Vietnam comes after its iPhone facility in Zhengzhou, central China, was shaken by an exodus of tens of thousands of employees and violent worker protests despite tight pandemic control measures enforced during a Covid-19 outbreak that began in late October.
China’s trouble rolling over to manufacturers and international businesses”Covid-19 problems… severely affected supply of iPhone 14 Pro and iPhone 14 Pro Max and continued for much of December,” Apple CEO Tim Cook stated earlier last month during an earnings call, alluding to the unrest at Foxconn Zhengzhou.
The market was taken aback when the California-based tech behemoth disclosed a sales decrease in the December quarter, blaming supply interruptions caused by China’s flu regulations. The business announced a 5% year-on-year dip in revenue to US$117 billion for the December quarter, its first quarterly revenue decline since early 2019.
Apple’s China Plus One policyDespite the setbacks, Foxconn finalised plans to shift some of its MacBook manufacturing to Vietnam in late December, with the first items anticipated to arrive as early as May this year, according to a Nikkei Asia Review story at the time.
According to Reuters, Foxconn also wants to treble the workforce at its iPhone-making Indian unit over the next two years. In December, the business announced a $500 million investment in its Indian affiliate.
Cook reaffirmed the company’s ambitions to diversify the iPhone supply chain during the results conference. “On just the iPhone, component components come from many different places throughout the world, and the final assembly comes from three separate countries,” he explained. “We’ll keep optimising it over time.”
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