Taiwanese Foxconn technology, which makes electronics for Apple, was granted a license by the Vietnamese government this week to build a $ 270 million factory to manufacture laptops and tablets in the Southeast Asian nation amid US-China tensions.
The new plant, which is being developed by Foxconn subsidiary Fukang Technology, is located in rural Bac Giang Province, just outside Hanoi, and can produce eight million units annually, according to the Vietnamese government website.
Founded by Taiwanese billionaire Terry Gou, Foxconn has been operating in Vietnam since 2007 and has invested a total of $ 1.5 billion. The contract electronics maker plans to invest an additional $ 700 million this year and hire 10,000 more local workers in Vietnam, the government said.
Foxconn makes most of its assembly of iPads and MacBooks for Apple in China, where it operates 12 factories in nine cities, but is shifting some of its work to Vietnam at the request of the US tech giant, Reuters reported. US-China trade tensions caused companies to shift production from China, where the US has imposed tariffs, to other countries, including neighboring Vietnam. Foxconn supplies finished electronics from its Chinese factories to the US, Apple’s largest market.
“The trade war really caught them because they were so dependent on China,” said Rajiv Biswas, executive director and chief economist in the Asia-Pacific region at research company IHS Markit.
The manufacturing sector in Vietnam has been growing steadily since 2012 due to the low labor costs and proximity to raw materials in China as well as government support for foreign investments. Foxconn is aiming for Vietnam to save labor costs that are lower than China, says Biswas. Lower reliance on China would protect Foxconn against any recurrence of last year’s disruption when factories in China closed to contain the spread of the coronavirus, he adds.
Foxconn is applying separately for approval to build a $ 1.3 billion industrial park in Thanh Hoa in northern Vietnam for additional factories, reported Nhip Cau Dau Tu Magazine.