Citing three people with direct knowledge of the matter told Nikkei Asia that Luxshare Precision Industry and Foxconn — Apple suppliers headquartered in China and Taiwan, respectively — have commenced test production of the Apple Watch in northern Vietnam. The report added that the goal is to produce the device outside China for the first time.
"AirPods, Apple Watch, HomePod and more ... Apple has big plans in Vietnam, apart from iPhone manufacturing," one of the people with direct knowledge of the situation told Nikkei Asia. "The components for MacBooks have become more modularized than in the past, which makes it easier to produce the laptops outside of China. But how to make it cost-competitive is another challenge."
This is not unusual for Apple. Before this, the tech company had been shifting some areas of iPhone production from China to other markets, including India, where it started manufacturing iPhone 13 this year and is also planning to assemble iPad tablets.
While Apple continues to expand its operations and productions to various sources, Vietnam remains Apple's most crucial production hub outside of China, producing a wide range of flagship products for the American company, including iPad tablets and AirPods earphones.
In fact, at the height of the COVID-19 pandemic, when the supply chain was massively disrupted, Apple continued to shift its iPad production to Vietnam. BYD of China was the first to assist with this shift, though sources told Nikkei Asia that Foxconn, too, is now helping build more iPads in Vietnam. The sources added that Apple is also in talks with suppliers to build test production lines for its HomePod smart speakers in Vietnam.
According to industry experts, the Apple Watch is even more sophisticated to produce. And as Vietnam attempts to upgrade its tech manufacturing sector further, producing the device that requires squeezing so many components into such a small case would be a huge win.
Two sources also revealed Apple’s working with suppliers to initiate a test production line in Vietnam for MacBooks. However, progress in moving mass production to the country has been slow, partly due to pandemic-related disruptions but also because notebook computer production involves a larger supply chain, multiple sources said. That network is currently centered in China and very cost-competitive, they added.
The number of Apple suppliers with facilities in the country has increased to at least 22 from 14 in 2018, according to Nikkei Asia's analysis of Apple's latest available suppliers list and interviews with sources. Many other major electronics manufacturers like Google, Dell, and Amazon have set up production in Vietnam to diversify beyond China.
In a June report, other Apple suppliers Pegatron and BYD released their intent to expand in Vietnam. By then, BYD had already employed 4,000 workers and was planning to double the number of staff.
As of this writing, Apple, Foxconn, and Luxshare have yet to give an official statement.