Apple considers making its watches and MacBooks in Vietnam instead of China

Apple is reportedly considering producing its Apple Watch and MacBook in Vietnam for the first time, in a move that would lessen the company’s dependence on China amid rising international tensions.

Apple’s key suppliers for the watches and laptops have started test production in northern Vietnam, Nikkei Asia reported on Tuesday, citing people familiar with the matter.

It follows weeks of escalated rhetoric from Beijing following Speaker Nancy Pelosi’s visit this month to Taiwan, the self-governed island that China claims as its territory. 

Apple, the biggest company in the US, has long been dependent on Chinese factories. But according to the new report, its Chinese supplier Luxshare Precision Industry and Taiwan-based Foxconn are exploring the new production lines in Vietnam.

In 2016, Apple struck a $275billion deal with Chinese authorities – which allowed the tech giant to grow most of its operations in the county while also doing ‘its part to develop China’s economy and technological prowess through investments, business deals and worker training.’  

Taiwan-based Foxconn is one of the suppliers exploring the new production lines in Vietnam

Although its unclear how much of the $275billion contributed to product manufacturing and development, the 2016 deal proved how much California-based Apple relied upon China for its business. 

The five-year agreement, forged by CEO Tim Cook, would have expired last year, according to The Information. It’s unclear if this new move to Vietnam is in response to the agreement’s supposed end. 

An Apple spokesperson did not immediately respond to a request for comment from DailyMail.com on Wednesday.

Apple began diversifying its production in Vietnam in 2020, when it began to shift production of their highly-popular AirPods there.

Since then, Apple has also expanded production of iPads in the Southeast Asian country. 

The number of Apple suppliers with facilities in Vietnam has increased to at least 22 from just 14 in 2018, according to Nikkei Asia. 

Apple also started manufacturing the iPhone 13 in India this year, and is also planning to assemble iPad tablets in the region. 

It marks a change in strategy for Apple, which for decades has relied on factories in China for nearly all of its production needs.

But iPhones – which are Apple’s most valuable products and have created the most profit for the company since 2008 – are still mainly being manufactured in China. 

Employees work on the assembly line at Hon Hai Group’s Foxconn plant in Shenzhen, China

In 2022 alone, more than 50 percent of Apple’s revenue was generated from iPhone sales. 

But as time goes on, tensions have only increased between authorities in the US and an increasingly belligerent Beijing. 

Following Pelosi’s recent visit to Taiwan, China encircled the island with live-fire military drills, and issued bellicose warnings to the US not to interfere.

Beijing threatened retaliation, warning of Pelosi’s visit: ‘Those who play with fire get burned.’ 

China sees the island as a breakaway province to be annexed by force if necessary, and considers visits to Taiwan by foreign officials as an infringement on Chinese sovereignty. 

One Wednesday, Taiwan held its own military exercises, following days of Chinese missile firings and incursions into Taiwan’s sea and airspace by ships and planes from the People’s Liberation Army.  

Pelosi is pictured above on her Taiwan visit, walking next to Legislative Yuan Vice President Tsai Chi-chang

India, the world’s second-biggest smartphone market, along with countries such as Mexico and Vietnam are becoming increasingly important to contract manufacturers supplying American brands, as they try to diversify production away from China.

Last week, Taiwanese contract manufacturer Foxconn gave 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 – formally called Hon Hai Precision Industry Co Ltd – has dealt with a severe shortage of chips that hurt production.

Supply chains have struggled as bottlenecks from the pandemic lingered and the Ukraine war further strained logistical channels.