Apple’s Factories in Vietnam: Where They Are and Why

In the past year a number of key announcements have confirmed Apple is well and truly diversifying out of China. Apple suppliers of a range of products now have factories in Vietnam. Here’s who they are, where they have decided to set up their operations, and why.

Apple is reportedly planning to produce MacBooks in Vietnam from this year adding to a long line of products that are now being made in the Southeast Asian electronics manufacturing powerhouse.

Taiwan’s Foxconn, for example, a key Apple supplier, is set to establish a factory in Vietnam to the tune of US$270 million this year, according to Nikkei Asia. BOE Technology Group, is also set to follow suit, with Reuters reporting the Chinese display maker, which not only supplies Apple but Samsung too, is planning a US$400 million investment.

Foxconn and BOE, however, are just two companies in a growing line of Apple suppliers moving their operations south of the border.

Apple suppliers and manufacturers in Vietnam

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According to Apple’s supplier list for 2022, there are currently 26 suppliers with 28 factories in Vietnam servicing the tech giant’s electronics manufacturing needs. These factories are spread around 15 provinces with the majority located in the north.

Apple manufacturing plants in Vietnam by province and region

Source: Apple Supplier List 2022

Why does Apple make products in Vietnam?

For electronics manufacturers like Apple, Vietnam is a very attractive alternative to China. Vietnam’s north in particular offers a number of advantages that few other locations can match. Most predominantly this is its proximity to China and the ability for manufacturers to integrate the region into existing supply chains.

There are, however, several other key benefits to electronics manufacturing in Vietnam’s north. These include transport infrastructure and the availability of low-cost, high-skilled labor.

Infrastructure in northern Vietnam

Hai Phong, for example, has the largest deep-sea port in Northern Vietnam. The provincial government is also planning to expand the port to accommodate vessels of 100,000 deadweight tonnage (DWT).

See also: Vietnam’s Hai Phong: An Industrial Gateway and Port City

Hai Phong’s port is also linked to the surrounding provinces by both road and rail. This has allowed for other parts of northern Vietnam to also develop strong manufacturing bases with industrial parks spread out across the north of the country.

For Apple, this has materialized in three key manufacturing hubs in: Bac Ninh, Bac Giang, and Hai Phong. This is also leading to a snowball effect whereby greater investment in the manufacturing sector is leading to greater investment in surrounding infrastructure facilitating smoother and easier transportation of goods.

See also: Bac Giang: An Emerging Investment Destination – Vietnam Briefing News

Labor in northern Vietnam

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Vietnam also has an abundance of low-cost, yet relatively high-skilled labor. Northern Vietnam, in particular, has been an electronics manufacturing hub for years and this has allowed for workers to flourish in terms of skill development.

Hanoi, Vietnam’s capital, is also located in the north and is Vietnam’s second biggest population center. With the full gamut of amenities of any metropolis in the world, workers can have a high quality of life within its borders while also commuting to factories beyond the cities borders–many companies bus their staff into and out of the city.

See also: Salary and Wages in Vietnam

Vietnam’s role in Apple’s diversification strategy

Apple has for some time now been in the process of diversifying its supply chain. Though China-plus-one is often touted as the new paradigm, in reality, what is more likely is a China-plus-many strategy. India, for example, is shaping up as a key competitor to Vietnam for FDI.

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Vietnam, however, as a manufacturing location, with its vast coastline, proximity to China and to the United States, and its youthful, low-cost workforce has distinct advantages that its competitors do not.

In this light, as part of Apple’s diversification strategy, Vietnam is set to become Apple’s largest final assembler. As a result, Vietnam, and northern Vietnam in particular, should see a much more experienced, higher-skilled workforce develop which will benefit the manufacturing sector more broadly, including new entrants into the market.

That said, choosing the right location can be difficult and understanding what each location offers may be key to a manufacturer’s success. For location selection support contact the business intelligence unit at Dezan Shira and Associates.

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