Foxconn to shift some Apple production to Vietnam to minimise China risk

Compal Electronics

26/11/2020 10:06

(Adds detail on iPad production in China, paragraph 12)
    By Yimou Lee
    TAIPEI, Nov 26 (Reuters) - Foxconn  2317.TW  is moving some
iPad and MacBook assembly to Vietnam from China at the request
of Apple Inc  AAPL.O , said a person with knowledge of the plan,
as the U.S. firm diversifies production to minimise the impact
of a Sino-U.S. trade war.
    The development comes as the outgoing administration of U.S.
President Donald Trump encourages U.S. firms to shift production
out of China. During Trump's tenure, the United States has
targeted made-in-China electronics for higher import tariffs,
and restricted supplies of components produced using U.S.
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 building assembly lines for Apple's iPad tablet
and MacBook laptop at its plant in Vietnam's northeastern Bac
Giang province, to come online in the first half of 2021, the
person said, declining to be identified as the plan was private.
    The lines will also take some production from China, the
person said, without elaborating how much production would 
shift.
    "The move was requested by Apple," the person said. "It
wants to diversify production following the trade war."
    Foxconn said in 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 Co
Ltd, on Tuesday announced a $270 million investment to set up a
new subsidiary called FuKang Technology Co Ltd - a move the
person said was aimed at supporting the Vietnam expansion.
    The contract manufacturer also plans to make television sets
at the Vietnam plant for clients including Japan's Sony Corp
 6758.T , with the beginning of such production slated for late
2020 to early 2021, the person said. Sony declined to comment.
    The factory will also make other electronic products such as
computer keyboards, the person said.
    According to Taipei-based research group TrendForce, all
iPads are assembled in China and so Foxconn's move would mark
the first time that the iPad has been made outside China.
    Foxconn already plans to spend up to $1 billion expanding an
iPhone assembly plant in India as "strongly requested" by Apple
to diversify production beyond China, people with direct
knowledge of the matter told Reuters in July.  urn:newsml:reuters.com:*:nL3N2EJ019
    It and peers such as Pegatron Corp  4938.TW  are also
considering building plants in Mexico, people with knowledge of
the matter said, as Washington promotes near-shoring production.
 urn:newsml:reuters.com:*:nL1N2FQ0DY
    Foxconn Chairman Liu Young-way in August told investors the
Sino-U.S. trade war had split the world into two, saying his
firm aimed to provide "two sets of supply chains".  urn:newsml:reuters.com:*:nL4N2FE1JA
    Other iPad assemblers include Taiwan's Compal Electronics
Inc  2324.TW  and China's BYD Electronic International Co Ltd
 0285.HK .

 (Reporting by Yimou Lee; Additional reporting by Taipei
newsroom, Brenda Goh in Shanghai and Makiko Yamazaki in Tokyo;
Editing by Christopher Cushing)
 ((ben.blanchard@thomsonreuters.com;))