The diversification of Apple’s product manufacturing outside of China continues. The trade war unleashed by the outgoing Trump administration forced companies like Apple to consider other locations for their contractors’ plants. Now, Foxconn has secured permission to build one in Vietnam worth $270 million.
It is expected to manufacture several different models of iPad and Mac. But it doesn’t specify which ones exactly.
The Vietnamese government on Monday granted a license to Foxconn to build a $270 million plant. Located in the northern province of Bac Giang, the government assures that it will produce “eight million units,” although it does not specify the mix. In the past, Apple sold some 40 million iPads and 20 million Macs a year, so it would be a fraction of the total.
Foxconn has invested a total of $1.5 billion in Vietnam, and it plans to increase the investment by another $700 million by hiring 10,000 additional workers, also includes another $1.3 billion investment for Thanh Hoa province, south of Hanoi.
The move comes after Apple asked the company to move part of its production to the Asian country. As we can see, this is a way of getting a fraction of the total production out of China. It’s a way to reduce the risk related to commercial tensions.
Diversifying the supply chain also makes it more complex. Although it is compensated with lower labor costs, since in China the labor cost index has doubled in the last decade.