iPhone Maker Foxconn Diversifies Away From China, Enters Vietnam

Trisha Kae Andrada, Tech Times 16 February 2023, 01:02 pm

Foxconn

(Photo : SAM YEH/AFP via Getty Images)

Foxconn Technology Group, Apple's largest contract manufacturer, has announced its acquisition of a new site in Vietnam. The Taiwanese firm continues attempting to relocate further production away from mainland China after massive interruptions at its primary manufacturing base late last year.

Expanding Into Vietnam

Foxconn, formerly Hon Hai Precision Industries, has leased 45 hectares (111 acres) from Saigon-Bac Giang Industrial Park Corp for about $62.5 million to fulfill operating demands and enhance manufacturing capacity. This is stated in a filing with the Taiwan Stock Exchange on Tuesday, Feb. 14.

According to South China Morning Post (SCMP), Foxconn's subsidiary Fulian Precision Technology Component Co. secured the space at the Quang Chau Industrial Park in the Bac Giang province to the east of Hanoi. According to the corporation, the lease period ends in February 2057.

In a Reuters article from last year, quoting the Vietnamese government paper Tuoi Tre, Foxconn struck a $300 million deal with a Vietnamese developer in August 2022 to construct a new facility in Bac Giang, where it currently makes iPads and AirPods. The report was vague about what will be manufactured at the new plants.

Apple's Previous Hurdles

Beginning in late October 2022, there was mass migration of tens of thousands of employees and violent worker protests at Foxconn's world-largest iPhone plant in the central Chinese city of Zhengzhou, also known as iPhone City, due to strict pandemic control measures forced during a Covid-19 outbreak. After this, Foxconn signed a new deal to manufacture iPhones in Vietnam.

On an earnings call earlier this month, Apple CEO Tim Cook referred to the turbulence at Foxconn Zhengzhou, saying, "Covid-19 challenges ... significantly impacted the supply of iPhone 14 Pro and iPhone 14 Pro Max and lasted through most of December [2022]."

The market was taken aback when the California tech giant revealed a sales dip for the quarter ending in December 2022. The company blamed supply interruptions as a consequence of China's pandemic regulations.

It was the first quarterly sales fall for the corporation since the beginning of 2019, as revenue fell 5% year-over-year to $117 billion in the quarter ending in December last year.

As a result of the delays, Foxconn completed preparations by the end of the previous year to move part of its MacBook manufacturing to Vietnam, with the first items set to arrive as early as May of this year, as reported by Nikkei Asia Review.

It is also said that Foxconn intends to treble the size of its workers at its iPhone manufacturing facility in India. In December 2022, it was reported that the corporation would be investing $500 million in its Indian affiliate.

On the results call, Cook affirmed the company's intention to further diversify the iPhone supply chain.

"There are component parts coming from many different countries in the world, and the final assembly coming from three countries in the world on just the iPhone," he stated. "We'll continue to optimize it over time."