Apple supplier Foxconn is going to spend $300 million to expand its production facilities in Vietnam, according to a new report. The move is meant to boost and diversify its production in the region.
Foxconn aims to further diversity production in Vietnam
As reported by Reuters, Foxconn has signed a $300 million memorandum of understanding with Vietnamese developer Kinh Bac to expand its facility in northern Vietnam. According to the publication, the new factory will be built on a plot of 125 acres and will generate 30,000 local jobs.
Foxconn, which has been in Bac Giang for 15 years, has moved part of its iPad and AirPods production to Bac Giang’s Quang Chau Industrial Park, Tuoi Tre reported. It did not say which type of products would be produced at the new factory or its capacity. The Vietnamese government said last year Foxconn had invested $1.5 billion in the Southeast Asian country.
This report comes after TF Securities analyst Ming-Chi Kuo revealed that the Apple Watch Series 8 is already being assembled in Vietnam, and suppliers are expected to increase production for the lineup ahead of its launch. In fact, more than half of the units of the upcoming lineup will be manufactured in Vietnam.
Apple suppliers moving more of their production for China to Vietnam is supposed to ensure supply constraints stay at a minimum for the tech giant’s shipments. In related news, Apple is also planning to produce MacBooks in the region. Production of Apple’s HomePod, AirPods, iPads, and iPhones is already taking place in the country.
This report shows the importance for Foxconn – and Apple – to diversify production outside China. With the pandemic and recent lockdowns in the country, having more options to produce its products is key to avoiding supply constraints, while at the same time it helps lower prices for Apple.
Foxconn’s first major move in moving production to Vietnam was when it was awarded a license to build a $270 million plant in the region. Prior to that, the supplier had invested $1.5 billion in the country. Earlier in May, Prime Minister of Vietnam Pham Minh Chinh met with Apple CEO Tim Cook to discuss the expansion of the tech giant’s business in the country. The Prime Minister said that consumers of all ages are big fans of Apple products which is only expected to increase due to the “growth of the global digital economy.”