Apple will transfer part of the iPad production from China to Vietnam. The move will protect the electronics maker from political interference and supply chain disruption. These two risks are high in China today. But Vietnamese companies will not benefit much, however.
Apple’s products, from the iPhone to the MacBook, are almost all assembled in China. The tech giant has remained steadfast in its relationship with the country despite years of mounting tension between the United States and China, and threats of blacklists and punitive tariffs. AirPods had been the exception to the rule. Apple moved the mass production of its headphones to Vietnam in 2020.
Moving production away from the more expensive iPad, which accounts for a third of the world’s tablet market, would be a much more decisive change. Most component suppliers are based in China at the moment, seeking proximity to assembly plants.
Politically, the time is ripe for diversification. Gina Raimondo, the US Commerce Secretary, warned that the Biden administration is actively considering including Chinese companies on its economic blacklists. The United States is investigating alleged evasions of sanctions by China.
Shanghai is taking steps to end two months of severe lockdown, which has seriously crippled the world’s industry. The effects of factory closures are expected to be lasting because of the backlog of backlog.
China continues to face inventory problems. The lockdowns in Shanghai have meant the country faces a shortage of low-tech components such as printed circuit boards. They are used in all kinds of electronics. Local supplies of copper foil – an essential input – were also severely hampered.
The hope that all this will greatly benefit Vietnamese component manufacturers is unfounded. Companies that already have experience building factories that meet Apple’s requirements in China will enjoy the greatest rewards. Apple’s existing suppliers will be guaranteed a place at the front of the queue. They include China’s BYD, Taiwan’s Hon Hai Precision, and Japan’s Murata Manufacturing.
The transfer will benefit the Vietnamese economy through the creation of industrial jobs. They must be relatively well paid in a country where the average annual income was $2,800 in 2020, while China’s per capita income was $10,400. China’s loss will be Vietnam’s gain.
Translation by Paulo Migliacci
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
