As trade conflict threatens Apple’s manufacturing pipeline, some analysts believe Vietnam is the next best option. Manufacturing partners like Pegatron have set up shop in the Southeast Asian nation, however, few Apple products are built there.
By Chand Bellur
January 21, 2020 at 8:39 p.m. PDT
Manufacturers Moving to Vietnam
Located on the eastern part of the Southeast Asian Indochinese Peninsula, Vietnam is a relatively small nation. Its population of 95.5 million inhabits approximately 128,000 square miles, making it only the 65th largest nation in the world. Despite its relatively diminutive size, the rapidly developing nation boasts a large population of skilled workers, ready to manufacture the future.
Officially a socialist nation, Vietnam is rapidly transforming into a market economy. Manufacturers from all over the world already make products in Vietnam. Although Apple’s AirPods and, possibly, camera modules are manufactured in Vietnam, the tech giant has room to grow. With an unpredictable trade war, Vietnam may be Apple’s next destination for manufacturing.
Apple May Manufacture iPhone in Vietnam
Apple contracts with third-party firms, such as Pegatron and Foxconn, to manufacturer the iPhone and other devices. Being a multinational corporation, Apple has a massive, elaborate supply chain spanning the globe.
Apple partner Pegatron is already set up in Vietnam, however, for now, they’re not manufacturing anything for Apple. The company currently rents one facility, but is in the process of establishing a bigger presence in Vietnam.
As iPhone sales have leveled off over the past few years, simply expanding manufacturing may not be Apple’s complete strategy. They may instead shift manufacturing to more cost effective areas. Vietnam may offer cheaper labor, property and tax incentives and effectively dodge U.S. trade policy.
Given that Apple’s AirPods are manufactured in Vietnam, the company already has a minimal presence. Uncertain trade policy may force Apple to move more manufacturing to Southeast Asia.
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