Apple may make watches and MacBooks in Vietnam instead of China

Apple is allegedly considering manufacturing its Apple Watch and MacBook for the first time in Vietnam, a move that would reduce the company’s reliance on China amid escalating global tensions.

Nikkei Asia reported on Tuesday, citing sources familiar with the situation, that Apple’s primary suppliers for watches and laptops have begun test manufacturing in northern Vietnam.

It follows weeks of escalating rhetoric from Beijing in response to Speaker Nancy Pelosi’s visit to Taiwan, which China claims as its territory, earlier this month. Apple, the largest firm in the United States, has relied on Chinese manufacturers for decades. According to a fresh report, however, its Chinese supplier Luxshare Precision Industry and Taiwan’s Foxconn are investigating the possibility of establishing new production lines in Vietnam.

In 2016, Apple reached a $275billion agreement with Chinese authorities, allowing the tech giant to expand the majority of its activities in the country while contributing to the development of China’s economy and technological strength through investments, business transactions, and employee training. Although it is unknown how much of the $275 billion contributed to product manufacturing and development, the 2016 deal demonstrated how dependent Apple’s company was on China.

According to The Information, the five-year agreement signed by CEO Tim Cook would have expired last year. It is unclear whether this latest move to Vietnam is a reaction to the agreement’s rumored expiration.

Wednesday, a spokesman for Apple did not immediately respond to a request for comment from is pictured above on her Taiwan visit, walking next to Legislative Yuan Vice President Tsai Chi-changEmployees work on the assembly line at Hon Hai Group's Foxconn plant in Shenzhen, ChinaTaiwan-based Foxconn is one of the suppliers exploring the new production lines in VietnamApple may make watches and MacBooks in Vietnam instead of China

In 2020, Apple began diversifying their operations in Vietnam by shifting manufacture of their immensely popular AirPods there.

Since then, Apple has also extended iPad production in the Southeast Asian nation, and some iPhone production areas have migrated to India.

This year, Apple also began producing the iPhone 13 in India and plans to produce iPad tablets in the region. Nikkei Asia reports that the number of Apple suppliers having operations in Vietnam has climbed from 14 in 2018 to at least 22 in 2019.

It is a shift in approach for Apple, which has relied on Chinese manufacturers for nearly all of its production needs for decades.

But iPhones, Apple’s most valuable product and the source of the company’s greatest profit since 2008, are still primarily built in China.

More over fifty percent of Apple’s revenue was generated by iPhone sales in 2022 alone.

But as time has passed, tensions between U.S. officials and an increasingly hostile Beijing have only intensified.

After Pelosi’s recent trip to Taiwan, China surrounded the island with live-fire military exercises and issued threatening threats to the United States not to interfere.

Beijing warned of reprisal in response to Pelosi’s visit, stating, “Those who play with fire get burned.”

China views Taiwan as a breakaway province to be annexed by force if necessary, and views foreign officials’ visits to the island as a violation of Chinese sovereignty.

Following days of Chinese missile launches and incursions into Taiwanese sea and airspace by People’s Liberation Army ships and aircraft, Taiwan conducted its own military drills on Wednesday.

India, the second-largest smartphone market in the world, along with Mexico and Vietnam, are becoming increasingly crucial to contract manufacturers supplying American brands as they attempt to diversify away from China.

Foxconn, a Taiwanese contract maker, issued a pessimistic forecast for the current quarter last week, noting a slowdown in smartphone demand in the wake of a pandemic-fueled surge.

Foxconn, formerly known as Hon Hai Precision Industry Co Ltd, has had a serious shortage of chips, which has hampered output.

In addition to the pandemic-induced bottlenecks, the Ukraine conflict has severely stressed logistical systems.

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