Apple suppliers are currently in talks to produce MacBook and Apple Watch in Vietnam for the first time since the products were launched.
Apple Production in Vietnam
According to Nikkei Asia, Luxshare Precision Industry, Apple's Chinese supplier, and Foxconn, a Taiwan-based supplier, have begun test production of the Apple Watch in northern Vietnam.
The iPhone maker has asked suppliers to set up a test production line in Vietnam for the MacBook, adding that progress in moving mass production to the country has been very slow due to pandemic-related disruptions but also because notebook computer production involves a massive supply chain.
The tech giant has been shifting some areas of iPhone production from China to other markets, including India, where it began manufacturing iPhone 13 in early 2022, and is also planning to assemble iPad tablets.
Also Read: Samsung Leads Smartphone Production, Pushing Apple to Second Spot
India, which is the world's second-biggest smartphone market, together with countries such as Vietnam and Mexico, is becoming increasingly important to contract manufacturers to supply American brands as they try to diversity production away from China.
Foxconn, Luxshare Precision, and Apple did not comment about the move, according to Reuters.
In early August, Taiwanese contract manufacturer Foxconn gave a cautious outlook for the current quarter after releasing results that exceeded expectations, citing slowing smartphone demand after a pandemic-fuelled increase.
Like other global manufacturers, Foxconn, formally called Hon Hai Precision Industry, has dealt with a severe shortage of chips that affected production as bottlenecks from the pandemic lingered and the Ukraine war further strained the company's logistical channels.
iPad Production Pause
According to SCMP, Foxconn Technology Group suspended its operations at its factory in Chengdu, Sichuan province in China.
The suspension lasted six days due to an electricity shortage that has put pressure on iPad suppliers ahead of the US tech giant's annual product launch.
Foxconn has shut down production from Aug. 15 to Aug. 20, maintaining only 20% of its electricity load for security purposes.
A representative for the company confirmed the report and added that the impact has been limited at the moment and that the company's other plants in the country are operating normally.
The power cuts are imposed on industrial users to make sure that the power supply is for residential use amid summer temperatures.
But the curbs have further disrupted the company's mainland production, in addition to the impact of intermittent COVID-19 lockdowns.
The power problem in Sichuan may affect Foxconn's iPad assembly lines and those of Compal Electronics in nearby Chongqing municipality.
Ming-Chi Kuo, a TF International Securities analyst, said that even though it is difficult to assess the impact on production right now, the impact should be limited if the power outage can end on Aug. 20.
Kuo added that flexible production scheduling by assemblers should help mitigate any effect. Still, it remains to be seen whether similar incidents will happen again in the next couple of months and affect the company's product shipments during the peak season.
On Sunday, Aug. 14, Sichuan's Economic and Information Department ordered industrial users in 19 different cities across the province to stop production and make immediate adjustments.
Related Article: Apple Moves Production of iPad and MacBook to Vietnam After Things Heat with China
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Written by Sophie Webster
