Your next MacBook or Apple Watch could be coming from Vietnam

nanoguy

Posts: 1,243   +24
Staff member
Why it matters: Like many consumer electronics companies, Apple has long had the issue of over-dependence on China for a process it calls FATP — Final Assembly, Test, and Pack. This year, the Cupertino company has increased its effort to shift manufacturing to other Asian countries such as Vietnam, where it wants to make iPads, AirPods, MacBooks, and possibly even HomePods.

Over the past few years, several tech companies have been trying to move some of their manufacturing outside of China. Reshoring has proven a major challenge, so most companies have opted to take production capacity to neighboring Asian countries instead.

That process hasn't been without its own set of challenges, especially in the case of countries like Vietnam. Factory lockdowns over the past two years and a severe lack of local engineering talent have slowed things considerably. Suppliers like Foxconn have repeatedly called for the diversification of the tech supply chain in the face of increasing geopolitical and trade tensions.

For Apple, some iPhone production has already moved to India. And according to a Nikkei report, the Cupertino giant is currently in talks to make some Apple Watch and MacBook products in Vietnam to further reduce its reliance on Chinese manufacturing. Suppliers like Luxshare and Foxconn will soon set up test production lines for these devices in the Southeast Asian country. Apple also hopes to move HomePod production to the country, but it isn't considered a priority as the overall progress has been slow.

Apple already makes AirPods in the country and has been doing so since 2020. Earlier this year, it started making iPads in Vietnam thanks to BYD Electronics, but this was after several delays related to chips and component shortages that only recently started to ameliorate. It's worth noting that BYD is a Chinese supplier, which highlights the effort to balance the geopolitical impact of these moves.

For Vietnam, this development is a boon for the local tech industry. Newer MacBook models are much more modular, which has made it easier for suppliers like Foxconn to move production outside of China as the assembly process requires fewer and simpler steps. By contrast, the Apple Watch has a relatively complicated design that requires more skilled workers for the assembly process. Both devices cost more to assemble in Vietnam, but it's not yet clear if this added cost will reflect in the sticker price.

Other companies like Google, Amazon, and Dell have also set up production lines in Vietnam, but the local supply chain is still weaker and less price-competitive than that of China. As of writing, Apple has 22 Vietnamese suppliers, up from the 14 it had in 2018.

Masthead credit: Julian O'Hayan

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Uncle Al

Posts: 9,115   +8,154
If the product quality is anything like clothing made in Vietnam then it's going to be a real hit .....
 

p51d007

Posts: 3,310   +2,919
Ummm Vietnam is a "communist" puppet of China. Has been pretty much during the Vietnam war.
So most of their stuff probably comes from China anyway.
 

brucek

Posts: 1,212   +1,765
Why not make them in the USA? They are expensive enough......
It's not just about price. Actually price is the easy if painful part: it's ultimately just a decision they can make anytime they want. The much harder problem is that all these manufacturing lines require specialized manufacturing engineering expertise that the US largely abandoned at least a generation ago. Few if any schools teach it, there are no domestic career track pipelines that train it, and no one who is graduating today has it on their top 10 list of dream jobs (or has even heard of it for the most part.) I have been told that it may literally be impossible to build an acceptably-performing manufacturing line with available talent in the US today.

And yes, this seems like an issue that lawmakers & business leaders ought to start thinking strategically about.
 

Theinsanegamer

Posts: 3,542   +5,988
Ummm Vietnam is a "communist" puppet of China. Has been pretty much during the Vietnam war.
So most of their stuff probably comes from China anyway.
Vietnam has not been on good terms with China for decades by this point. They also are far more respectful of US copyright and trademark law then the chinese.
It's not just about price. Actually price is the easy if painful part: it's ultimately just a decision they can make anytime they want. The much harder problem is that all these manufacturing lines require specialized manufacturing engineering expertise that the US largely abandoned at least a generation ago. Few if any schools teach it, there are no domestic career track pipelines that train it, and no one who is graduating today has it on their top 10 list of dream jobs (or has even heard of it for the most part.) I have been told that it may literally be impossible to build an acceptably-performing manufacturing line with available talent in the US today.

And yes, this seems like an issue that lawmakers & business leaders ought to start thinking strategically about.
That sounds about as likely as apple being unable to source their special screws in the US, because none were made here.....because apple made them in one single factory specifically for themselves.

Nothing was stopping them from moving production to the US.

Manufacturing isnt that hard. The US has chip fab plants, motorola made phones here for several years. Anything specialized wouldnt be done in school, it would be done by the employer, something US companies have forgotten.

50-70 years ago companies trained people how to do their jobs, now they expect employees to already know it.

Ford, for instance, is claiming it cant find tool and die makers in america anymore, and blames the education system. Up until the late 90s, ford had an in house training program for anyone who wanted to be a T+D guy, it was cut to "save costs" and now the last of those who went through that program are retiring and ford is up pooper creek without a paddle. OOPS.
 

Mouseface

Posts: 74   +84
Good, we need to move away from China, they are just as bad as their unlimited genocide friend Putin and yesterday the UN confirms the chinese dictatorship have millions of minorities in forced labor camps and using them as slaves to make the dictatorship and its friends rich. This can NOT be allowed to continue.
 

Edster

Posts: 126   +110
Ummm Vietnam is a "communist" puppet of China. Has been pretty much during the Vietnam war.
So most of their stuff probably comes from China anyway.

Nope. You do know that Vietnam had fought a war against China more recently than the US? And currently they are part of the alliance of countries in the region that is strongly opposing China's claims of the South China Sea. This has blown out so much to the point that the Vietnamese government is at relatively pretty good terms with Washington. Reality is, Vietnam wouldn't take any crap from anybody.
 

OptimumSlinky

Posts: 276   +508
It's not just about price. Actually price is the easy if painful part: it's ultimately just a decision they can make anytime they want. The much harder problem is that all these manufacturing lines require specialized manufacturing engineering expertise that the US largely abandoned at least a generation ago. Few if any schools teach it, there are no domestic career track pipelines that train it, and no one who is graduating today has it on their top 10 list of dream jobs (or has even heard of it for the most part.) I have been told that it may literally be impossible to build an acceptably-performing manufacturing line with available talent in the US today.

And yes, this seems like an issue that lawmakers & business leaders ought to start thinking strategically about.

This. Apple looked at building computers in Texas a few years back, and even things as simple as the small screws used in the case couldn't be sourced Stateside in sufficient quantity: https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html

It's not just about "cost." The US decided to outsource all of the skill and supply chains decades ago to boost quarterly earnings and stock prices, and that's not something you can undo on a whim.
 

toooooot

Posts: 1,635   +845
Thats smart.
Besides, who thought moving all production to China was a good idea?
We are very different.
We have very serious differences regarding the way of life and governing.
Our countries could very easily have major international disagreements.
 

psycros

Posts: 4,344   +6,359
This. Apple looked at building computers in Texas a few years back, and even things as simple as the small screws used in the case couldn't be sourced Stateside in sufficient quantity: https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html

It's not just about "cost." The US decided to outsource all of the skill and supply chains decades ago to boost quarterly earnings and stock prices, and that's not something you can undo on a whim.

Both sides of the argument have merit. The biggest expense isn't moving your production lines from one area full of semi-skilled, underpaid serfs to another. The true cost is when you decide to undo 40 years of unbridled, greed-driven stupidity in order to rebuild your economic security. That said, the cost of NOT doing it is even higher now..any corporate titan who doesn't understand that is going to lead his company into dangerous waters.
 

brucek

Posts: 1,212   +1,765
any corporate titan who doesn't understand that
It's not just the corporate titans that need to understand. Apple is arguably one of the world's most powerful and best positioned companies, but if it tried to force this change on its own it would lose big as soon as it burned through its (admittedly huge) cash reserves.

Yes, the US could eventually rebuild all that know-how and infrastructure. No, it could not do it overnight, or in year, or maybe even ten. Nor could a single company do it on its own - we need an ecosystem of hundreds or thousands of companies providing all the parts and steps that go into these processes. And during that time, if every Apple product were to fall multiple generations behind say every Samsung product, while also costing very significantly more, they would lose a lot of their volume, which introduces its own cascading set of challenges.

All this only works if the government is footing the bill for the transition, and even that is no guarantee (you can compel a US market to purchase US goods, but not the rest of the world.) It may still be the smart thing to do. But you can bet many Americans would howl at the price tag no matter how important the strategy.
 

ypsylon

Posts: 525   +544
Ummm Vietnam is a "communist" puppet of China. Has been pretty much during the Vietnam war.
So most of their stuff probably comes from China anyway.
Yes Vietnam is 'commie', but you have to refresh your historical knowledge. Vietnam (or kingdoms which existed there before actual modern Vietnam was born) fought countless wars with China (Chinese Dynasties). China invaded Vietnam in support of Pol Pot of Cambodia few weeks after Vietnam war has ended. There is deep distrust and not well hidden hate toward everything that is Chinese. Yes Mao supported Vietnam in the 50s/60s because it was prudent thing to do at that time. China wanted to be the #1 Stalinist regime in the World so they did everything they could to out do the Soviets. Especially after 1960s Sino-Soviet split which almost ended in a full scale war between the two scum regimes. Ho Chi Minh knew this very well and played both tyrannies like a fiddle against each other for supplies.

As a side note: it would be nice for Apple to make things in the US (and I say this as non-US citizen). It kinds of make sense to have critical semiconductor manufacturing (and all infrastructure around it) at home, not inside or nearby frontiers of biggest tyranny this planet has ever seen.
 

Theinsanegamer

Posts: 3,542   +5,988
Good, we need to move away from China, they are just as bad as their unlimited genocide friend Putin
Taking a war in ukraine and calling it a "unlimited genocide" is a slap in the face to those who suffered actual genocide under tyrannical dictators. Look at rwanda and tell me we're even CLOSE to that with a straight face.
and yesterday the UN confirms the chinese dictatorship have millions of minorities in forced labor camps and using them as slaves to make the dictatorship and its friends rich. This can NOT be allowed to continue.
You been under a rock? The rest of the world has known about the uyghurs for decades now. Nobody cares, it's not the pets of the western elite being targeted, so nobody will do anything or care.

The US is the same UN that, during the rwanda genocide, decided airdropping machetes into the country would fix things. You think they care about china at all?