Apple to reduce its reliance on Chinese production

Some production of Apple products, like the iPad and MacBook, will move to Vietnam in order to avoid China-US trade tensions.

Foxconn is moving some iPad and MacBook assembly to Vietnam from China at the request of Apple, as the US firm diversifies production to minimise the impact of a China-US trade war.

The development comes as the outgoing administration of US President Donald Trump encourages American firms to shift production out of China.

During Mr Trump’s tenure, the US has targeted made-in-China electronics for higher import tariffs, and restricted supplies of components produced using US technology to Chinese firms it deems a national security risk.

Taiwanese manufacturers, wary of being caught up in the tit-for-tat trade war, have moved — or are considering moving — some production from China to countries such as Vietnam, Mexico and India.

Foxconn is understood to be building assembly lines for Apple’s iPad tablet and MacBook laptop at its plant in Vietnam’s north-eastern Bac Giang province, to come online in the first half of 2021.

The lines will also take some production from China, it is understood, but it is not known how much production would shift.

“The move was requested by Apple,” a source said. “It wants to diversify production following the trade war.”

Foxconn said in a statement: “As a matter of company policy, and for reasons of commercial sensitivity, we do not comment on any aspect of our work for any customer or their products”.

Apple did not immediately respond to a request for comment.

Taiwan’s Foxconn, formally Hon Hai Precision Industry, this week announced a $270m (€227m) investment to set up a new subsidiary called FuKang Technology — a move understood to be aimed at supporting the Vietnam expansion.

The contract manufacturer also plans to make television sets at the Vietnam plant for clients including Sony, with the beginning of such production slated for late 2020 to early 2021.

The factory will also make other electronic products such as computer keyboards.

Foxconn already plans to spend up to $1bn expanding an iPhone assembly plant in India as “strongly requested” by Apple to diversify production beyond China.

Foxconn chairman Liu Young-way in August told investors the China-US trade war had split the world into two, saying his firm aimed to provide “two sets of supply chains”.

Other iPad assemblers include Taiwan’s Compal Electronics and China’s BYD Electronic International.

• Reuters