Apple leading charge in new manufacturing

Apple suppliers are in talks to produce Apple Watch and MacBook in Vietnam for the first time, Nikkei Asia reported last week. Apple’s Chinese supplier Luxshare Precision Industry and Taiwan-based Foxconn have started test production of Apple Watch in the north of the country, the report added.

Apple has also asked suppliers to set up a test production line in Vietnam for the MacBook, the report said, adding that progress in moving mass production to the country has been slow partly due to pandemic-related disruptions but also because notebook computer production involves a larger supply chain.

Foxconn, meanwhile, has signed a deal with Saigon-Bac Giang Industrial Park JSC, a subsidiary of Kinh Bac City Development Holding Corporation, to rent an additional 50 hectares of Quang Chau Industrial Zone (IZ) in the northern province of Bac Giang. With the new land plot, Foxconn plans to develop a new project with an investment estimated at $300 million and generate over 30,000 jobs, but the group has yet to disclose what it would manufacture on the new land plot.

The new investment contributes to increasing the total funding of the Taiwanese tech manufacturer in Vietnam to $1.5 billion, including its existing facility at Quang Chau.

The world’s largest memory chipmaker Samsung is preparing for trial production of flip-chip ball grid array, a surface-mount packaging technology used for integrated circuits, at the Samsung Electronics facility in the northern province of Thai Nguyen.

“Commercial production is slated to begin in July next year. The group plans to invest an additional $3.3 billion in the country, and simultaneously will also help improve the competitiveness of 50 Vietnamese suppliers and promote cooperation with Vietnamese universities and research establishments,” said Samsung Electronics CEO Roh Tae-Moon at a meeting with Prime Minister Pham Minh Chinh on August 5.

The latest initiatives in Vietnam reflect the South Korean group’s increased effort to diversify the manufacturing supply chain. T

he added capital from both Foxconn and Samsung has also contributed a crucial role in keeping processing and manufacturing in the leading position in terms of foreign direct investment (FDI) inflows to Vietnam. In the first seven months of this year, the sector attracted $10 billion, becoming the most attractive area in the country for registered FDI.

Christopher J. Marriott, CEO of Savills Southeast Asia, said that the processing and manufacturing sector is being driven by a skilled workforce. Currently, production and logistics costs for the import and export of goods in Vietnam are at an attractive level. Import-export activity has also become more convenient thanks to the improvement in the logistics network.

“The manufacturing cost in Vietnam is also more competitive compared to other countries in the region, such as Singapore and China. Therefore, businesses are looking to alternative markets and Vietnam is working well in catching those trends, especially in the post-pandemic period,” Marriott said.

The consecutive expansion of foreign groups in the processing and manufacturing sector is to meet the increasing demand of the overseas market. Samsung Vietnam earned $34.3 billion from exports in the first half of 2022, up 18 per cent from the same period last year.

The group expected that the figure will be as much as $69 billion in this year, equivalent to 20.5 per cent of Vietnam’s goods and service export value last year ($336.3 billion).

A fortnight ago, Foxconn offered 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 has had to contend with a major shortage of chips that has hurt production, as bottlenecks from the pandemic lingered and the Russia- Ukraine conflict continued to harm logistics.

Vietnam’s export turnover of processed industrial products in the first seven months of 2022 continued to make a major contribution to the overall growth rate of export activities with an estimated turnover of $185.8 billion, up 16.1 per cent over the same period last year and accounted for 85.9 per cent of the total export turnover, according to the Ministry of Industry and Trade.

Many manufacturers in the global supply chain of major firms are gradually focusing on Vietnam.

Taiwan-based Hon Hai Precision Industry, better known as Foxconn, plans to lease 50.5 hectares of land in Quang Chau Industrial Park in the northern province of Bac Giang to develop a new project with an investment of $300 million.

Apple is in talks to make Apple Watches and MacBooks in Viet Nam for the first time as the US tech giant looks to diversify production away from China, Nikkei Asia reported.

Apple saw its shipments more than double during the second quarter of 2022 as it expanded its reach by increasing its official distributors.