Apple’s main iPhone supplier Foxconn is further expanding in Vietnam to move away from its China-centric production chain. In addition to its previous investment of $300 million in the region, the production company is leasing a new site in the Quang Chau Industrial Park.
Foxconn signs lease for a 111-acre plot in Vietnam
According to a new report from the South China Morning Post, Foxconn has agreed to a lease with Saigon-Bac Giang Industrial Park Corp for a 111-acre site. The lease, which is estimated to be for $62.5 million, is valid through February 2057.
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. In May 2022, 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.”
Following Tim Cook’s meeting with the Prime Minister of Vietnam, Foxconn signed a $300 million memorandum of understanding with Vietnamese developer Kinh Bac to expand its facility in northern Vietnam. The factory is expected to generate 30,000 local jobs.
Foxconn’s latest is a part of Apple’s plan to shift its production away from China. To help facilitate the move, the tech giant, in December 2022, told its partners to increase workers and expand facilities in India and Vietnam. The reasons for the move include geopolitical tensions, unstable production, and an increase in labor costs.
Some Apple products, including AirPods, the HomePod, Apple Watch, and the iPad, are already made in Vietnam by manufacturers. In mid-2023, Apple also intends to shift some MacBook Pro production to Vietnam, a first for the product category.
According to an earlier report from Bloomberg Intelligence, it will likely take the Cupertino tech giant eight years to move just 10% of its production capacity outside of China, where almost 98% of its iPhones have been made.