Apple, fearing the increased risk of doing business in China, has asked its suppliers to move some of their manufacturing capacity out of the country. Taiwan’s three largest Apple suppliers are now picking up the pace in Vietnam and India, and have already started production and built plants in both countries.
Foxconn, a subsidiary of Hon Hai Technology Group, Apple’s biggest manufacturing agent, is moving some of its assembly lines for iPad tablets and MacBook laptops from China to Vietnam, Reuters said in an exclusive report on Thursday (Nov. 26).
PEGATRON, Apple’s second-largest supplier, has approved a $4.23 billion investment in India to set up a subsidiary called PEGATRON India. Hon Hai and Wistron, another Taiwanese supplier to Apple, have already set up factories in India.
The Trump administration has encouraged U.S. companies to move production out of China. Under the Trump presidency, the U.S. has raised tariffs on Chinese-made electronics and restricted the supply of components using U.S. technology to Chinese companies that the U.S. believes pose a risk to national security.
Fearing involvement in the tit-for-tat trade war between the U.S. and China, or based on customer requests, Taiwanese manufacturers have moved or are considering moving some manufacturing operations from China to countries such as Vietnam, Mexico and India, with Vietnam becoming the preferred location for many companies outside of China. Reuters said, especially this year as U.S.-China relations deteriorate, including Hon Hai OEMs must provide two sets of supply chains to serve the “G2” two markets.
Foxconn is setting up a new production base in Vietnam’s northeastern province of Bac Giang, where it is setting up production lines for iPad tablets and MacBook laptops that will start production in the first half of next year, amid Apple’s demand to diversify production to reduce the risk of a U.S.-China trade war, an unnamed Foxconn source told Reuters. This will be the first time Hon Hai will produce iPads outside of China.
Foxconn said in a statement that it had no comment on matters related to its customers or products, Reuters said. Apple did not respond to Reuters’ request for comment.
Hon Hai announced on Tuesday (24 March) that it is investing $270 million in a new company called FuKang Technology Company Limited. Sources said this was to lay out the Vietnamese territory and expand the factory near the original Bac Giang site.
Taiwan’s three major Apple suppliers are also active in India and have received a total of $6.65 billion in manufacturing-related incentives (PLI) from the Indian government. All three companies are now accelerating their pace of deployment in India.
Hon Hai and Wistron have already set up factories in India. Construction is also ramping up on the second phase of Hon Hai’s new plant in Chennai and Wistron’s in Bangalore. Taiwan’s Central News Agency reported that PEGATRON is building a factory in a special economic zone in Chennai, India, which is expected to be completed in December. According to the report, PEGATRON’s new plant could be operational as early as June of next year if it is completed on schedule in December.
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