Apple actions highlight diversification

Apple consistently divulges little on business movements but the signs are there, Photo: Shutterstock

As manufacturer of Apple’s AirPod earphones, Goertek Vina Co., Ltd. in the northern province of Bac Ninh has been in a hurry to recruit 10,000 labourers, including manual workers, office staff, and managers with an offered maximum salary of VND25 million ($1,100) per month for management positions to serve operation of a new manufacturing facility. The interview period is taking place from the end of April until the end of this month.

In March, the company notified 700 trainee staff to work at its new AirPods and speakerphone manufacturing facility in Bac Ninh, with income offered at VND9-11 million ($390-480) per month.

Responding to VIR about the moves from the US tech giant, a Goertek representative declined to reveal any information, only asserting that “Apple always requires its partners to keep silence regarding its business plans.”

This recruitment coincides with recent news published on Nikkei Asian Review that Apple will allegedly produce millions of its wireless AirPods in Vietnam from this quarter. “The Vietnamese officials even granted special permits for a key Apple AirPod assembler to help the company bring in engineers to the country for smooth production during the lockdown.”

It is believed that to start operations in this quarter, Apple and its partners have signed co-operation agreements as well as silently installed manufacturing facilities without disclosing any information.

In a white paper on Vietnam’s industrial real estate in the first half of last year published by Savills Vietnam, Goertek Vina was named as one of the large-scale groups that had relocated facilities from China to Vietnam to avoid negative impacts of the US-China trade war.

And this January, Goertek Vina was granted an investment certificate for its project to manufacture electronics, network equipment, and multimedia products with a total investment of $260 million.

Along with Goertek, other Apple vendors have also taken root in Vietnam, in service of the giant’s production. For example, AirPod assembler Inventec is currently building a plant in Vietnam. Merry Electronics, Apple’s acoustic component supplier, is also reportedly collaborating with Luxshare to prepare a facility in Vietnam. The company said its operations will begin this summer.

Other Apple suppliers such as Foxconn and Pegatron are also increasing their footprint in northern Vietnam, even though they are not necessarily helping to make Apple products there currently.

Le Hoai Quoc, former director of Ho Chi Minh City High-Tech Park Management Board, told VIR that numerous data makes them believe that Apple has relocated its facilities to Vietnam.

Along with the US-China trade factor that is spurring Vietnam to become a safe destination, the country also has more advantages compared to others in Southeast Asia due to the long border with China. “The factory may likely be located in the north to be suitable and convenient with the parts supply chain of Apple. Haiphong port city may be a suitable selection,” Quoc said.

Echoing this view, Linda Liu, an economist at Malaysian-backed Maybank Kim Eng, told VIR that the ongoing pandemic is akin to a wake-up call for multinational companies about the risks of over-dependence on China. “The virus outbreak will further solidify the supply chain shifts towards the ASEAN as global multinational companies adopt a China+1 strategy to diversify supply chain risks,” said Liu.

According to the Financial Times, the US-China tensions and the COVID-19 outbreak have enhanced the exposure of dependence on a single nation for production. That has made global companies think twice about moving out of China and diversifying business lines to the other countries.

Thus, companies will prefer markets benefiting their sales revenues, which may be one of the main reasons behind Apple relocating its manufacturing lines of AirPods in Vietnam, which has previously been in favour of iPhones. Moreover, the local preference on the other Apple products is quite impressive.

Similar to Apple, its biggest competitor – South Korean-based Samsung – has accelerated production lines in the country. Specifically, Samsung smartphones have continued to be manufactured in its two facilities in the northern provinces of Bac Ninh and Thai Nguyen during the health crisis, while facilities in India were interrupted.