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Is Foxconn, a partner of Apple, heading for Vietnam?

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Foxconn, one of Apple’s most important partners, is planning to set up factory in Vietnam, possibly in the northern province of Bac Giang.

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Business Times reported that Foxconn injected $213.5 million into a company in India  from September 2018 to January 2019 in a ‘long term investment plan’ and it is paying $16.5 million to Fuhua for the right to use 250,000 square meters of land in an IZ in Bac Giang.

A Foxconn report said it is selling the land-use right in Vietnam to a unit belonging to FIT Hon Teng, a subsidiary of Foxconn. FIT Hon Teng, listing its shares on Hong Kong’s bourse, manufactures cables for iPhones.

Meanwhile, Apple plans to build a data center in Vietnam.

Pegatron Corp, a rival of Foxconn, has relocated a part of its production base to Indonesia as a result of the China-US trade war. The company is also considering renting production premises in Vietnam and India.

Both companies did not clarify if they are relocating the production of components for Apple. However, their move shows that Taiwanese companies, the major electronics manufacturers of the world, are reconsidering their reliance on China, and are preparing for changes in the manufacturing systems which brought great success to them in the 1980s.

Vietnamese market

Three years ago, the public was stirred up by the news about Apple’s plan to invest $1 billion in a data center in Vietnam. The two localities Apple eyed at that moment were Hanoi and Da Nang.

The establishment of a data center, according to analysts, aims to ease Apple’s reliance on its third-party data partners such as Amazon and Microsoft. 

If the project occurs, this will be the second project of Apple in Vietnam. Reuters in October 2015 reported that Apple invested VND15 billion, or $673,000 in Apple Vietnam LLC, a subsidiary located in HCMC.

The establishment of a subsidiary has paved the way for iPhone to sell its products in the Vietnamese market, as well as provide warranty and consultancy services.

Vietnam has emerged as an important market for Apple in the context of saturation in other large markets, including China, the US and India, which has led to a sharp fall in sales.

Though iPhones are expensive compared with the majority of Vietnamese, iPhone models all have been selling well in Vietnam. According to Counterpoint Research, Apple held 5 percent of smartphone market share in Vietnam in the period from Q2 2017 to Q2 2018.

Apple’s CEO Tim Cook, in a letter to staff in early 2019, predicted an all-time record high in sales in some key markets. Vietnam was among the markets he mentioned.

 

Source: VietNamNet

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