Apple is reportedly considering producing its Apple Watch and MacBook in Vietnam for the first time, in a move that would lessen the company’s dependence on China amid rising international tensions.
Apple’s key suppliers for the watches and laptops have started test production of Apple Watch in northern Vietnam, Nikkei Asia reported on Tuesday, citing people familiar with the matter.
It follows weeks of escalated rhetoric from Beijing following Speaker Nancy Pelosi‘s visit this month to Taiwan, the self-governed island that China claims as its territory.
Apple, the biggest US company, has long been dependent on Chinese factories, but according to the new report, its Chinese supplier Luxshare Precision Industry and Taiwan-based Foxconn are exploring the new production lines in Vietnam.
Apple CEO Tim Cook is seen in a visit to an overseas supplier. The company is considering shifting more production to Vietnam to lessen its dependence on China
Taiwan-based Foxconn is one of the suppliers exploring the new production lines in Vietnam
An Apple spokesperson did not immediately respond to a request for comment from DailyMail.com on Wednesday.
Apple began diversifying its production in Vietnam in 2020, when it began to shift production of AirPods there.
Since then, Apple has also expanded production of iPads in the Southeast Asian country.
The number of Apple suppliers with facilities in Vietnam has increased to at least 22 from just 14 in 2018, according to Nikkei Asia.
It marks a change in strategy for Apple, which for decades has relied on factories in China for nearly all of its production needs.
But as time goes on, tensions have only increased between authorities in the US and an increasingly belligerent Beijing.
Employees work on the assembly line at Hon Hai Group’s Foxconn plant in Shenzhen, China
Following Pelosi’s recent visit to Taiwan, China encircled the island with live-fire military drills, and issued bellicose warnings to the US not to interfere.
Beijing threatened retaliation, warning of Pelosi’s visit: ‘Those who play with fire get burned.’
China sees the island as a breakaway province to be annexed by force if necessary, and considers visits to Taiwan by foreign officials as an infringement on Chinese sovereignty.
One Wednesday, Taiwan held its own military exercises, following days of Chinese missile firings and incursions into Taiwan’s sea and airspace by ships and planes from the People’s Liberation Army.
Apple has already 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.
Pelosi is pictured above on her Taiwan visit, walking next to Legislative Yuan Vice President Tsai Chi-chang
India, the world’s second-biggest smartphone market, along with countries such as Mexico and Vietnam are becoming increasingly important to contract manufacturers supplying American brands, as they try to diversify production away from China.
Last week, Taiwanese contract manufacturer Foxconn gave a cautious outlook for the current quarter after posting results that exceeded expectations, citing slowing smartphone demand after a pandemic-fuelled boom.
Like other global manufacturers, Foxconn – formally called Hon Hai Precision Industry Co Ltd – has dealt with a severe shortage of chips that hurt production.
Supply chains have struggled as bottlenecks from the pandemic lingered and the Ukraine war further strained logistical channels.