Exclusive: Foxconn to transfer part of Apple production to Vietnam to minimize Chinese risk

TAIPEI (Reuters) – Foxconn is moving iPad and MacBook assembly from China to Vietnam at Apple Inc’s request, someone with knowledge of the plan said as the US company diversifies production to minimize the impact of a Sino-American trade war.

The development comes as the outgoing administration of US President Donald Trump encourages US companies to shift production out of China. During Trump’s tenure, the United States targeted Chinese-made electronics for higher import tariffs and restricted the supply of components produced using American technology to Chinese companies it deems risky for national security.

Taiwanese manufacturers, fearing they might get caught up in the tit-for-tat trade war, have moved or are considering shifting some of their production from China to countries like Vietnam, Mexico and India.

Foxconn is building assembly lines for Apple’s iPad tablet and MacBook laptop at its factory in Bac Giang province, northeast Vietnam, which will come online in the first half of 2021, has the person said, refusing to be identified because the plan was private.

The lines will also take some of the production from China, the person said, without specifying how much production would be moved.

“The move was requested by Apple,” the person said. “He wants to diversify production after the trade war.”

Foxconn said in a statement: “For reasons 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.

Foxconn of Taiwan, officially Hon Hai Precision Industry Co Ltd, on Tuesday announced an investment of $ 270 million to create a new subsidiary called FuKang Technology Co Ltd – a move the person said was aimed at supporting Vietnam’s expansion.

The contract maker also plans to make televisions at the Vietnam plant for customers including Japan’s Sony Corp, with production slated to start from late 2020 to early 2021, the person said. Sony declined to comment.

The factory will also manufacture other electronic products such as computer keyboards, the person said.

According to Taipei-based research group TrendForce, all iPads are assembled in China, so Foxconn’s move would mark the first time the iPad has been manufactured outside of China.

Foxconn already plans to spend up to $ 1 billion to expand an iPhone assembly plant in India as “strongly requested” by Apple to diversify production beyond China, people told Reuters in July. having direct knowledge of the subject.

She and peers such as Pegatron Corp are also planning to build factories in Mexico, people with knowledge of the matter have said as Washington promotes production near the coast.

In August, Foxconn Chairman Liu Young-way told investors that the China-US trade war had split the world in two, saying his company aimed to provide “two sets of supply chains.”

Other iPad assemblers include Compal Electronics Inc of Taiwan and BYD Electronic International Co Ltd.

Reporting by Yimou Lee; Additional reporting by the Taipei editorial staff, Brenda Goh in Shanghai and Makiko Yamazaki in Tokyo; Editing by Christopher Cushing

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