Apple’s manufacturing partners in Vietnam has increased compared to 2020, but still only account for a small part of the supply chain.
Apple has just announced a list of its supply partners for the fiscal year 2021 (ends September 2021). This report reveals 180 companies, accounting for 98% of Apple’s direct costs for materials, production and assembly globally.
Of these, 25 partners have factories in Vietnam, equivalent to 14%. This number is up from the same report for 2020, with 21 companies, or 10% of the total number of Apple partners.
Many familiar partners
Specifically, the list has many familiar manufacturing partners of Apple such as Hon Hai Precision (Foxconn), Luxshare Precision, or component suppliers Samsung, LG Display, Intel…
In fiscal year 2021, Apple added 5 new partners with factories in Vietnam, and eliminated one company (Foster Electric, which has factories in Binh Duong and Da Nang).
Apple has chosen Vietnam as a place to convert its supply chain from China to avoid dependence on this country. Photo: Forbes.
In addition, this list also adds Luxshare Precision’s factory in VSIP Industrial Park (Hung Nguyen District, Nghe An), which has been in operation since 2020. Before that, Luxshare manufactured Apple devices in Bac Giang.
Apple’s listing shows that it is still largely dependent on Chinese partners and factories located in the country. Apple added 6 Chinese companies in the past year, while dropping 7 companies.
However, the trend of moving out of China is still clear compared to the period 2017-2020, when one-third of Apple’s partners set up factories in China.
“Apple may reduce production in mainland China and increase its presence in India and Vietnam, but it is still very closely tied to the Chinese companies that are part of the supply chain,” Isaiah Research analyst Eddie Han told SCMP.
Higher expectations from Vietnamese factories
At the end of September, a report from JP Morgan stated that Vietnam will become an important manufacturing area for Apple, supplying 65% of AirPods, 5% of MacBooks, 20% of iPads and Apple Watch, by 2025.
Nikkei Asia considers this a step forward for Vietnam in the field of manufacturing and contributes to the global supply chain.
However, at the moment, all supply partners working directly with Apple are Chinese companies, and Vietnamese businesses have not been present. Therefore, Vietnam’s success in the manufacturing sector has attracted many other businesses to build supply chains.
Besides, Nikkei said that Vietnam has not yet developed a high-tech sector in the country, making it difficult for policymakers.
According to Nikkei Asia, Vietnam has a technology export growth rate that no other Southeast Asian country can match, with the share of high-tech exports reaching 42% in 2020, a sharp increase from 13% in 2010. But very few of these exports contribute to the country’s economic growth.
The amount of technology exports from Vietnam has increased sharply in recent years. Photo: Nikkei Asia.
However, most of Vietnam’s manufacturing industry can only assemble for big brands from other countries.
In Samsung Electronics’ 2020 list of top suppliers, the group only names foreign companies in Vietnam, although it has been operating in our country for 14 years and half of its smartphones are manufactured here.
Nikkei Asia assessed that Vietnam has many advantages compared to other countries such as a highly disciplined, cheap labor force and good economic development policies. However, our country also has many other obstacles such as unqualified labor and lack of technical equipment.
Economist Phung Tung, director of the Mekong Development Research Institute, said that if it succeeds in the manufacturing industry, Vietnam will become a serious competitor to regional manufacturers such as China’s Oppo or Malaysia’s Silterra chip maker.
But if it fails, Vietnam will forever be “stuck in the factory”, causing the economy to become congested, stagnant and unequal or have debt crises. In order not to fall into this tragedy, expert Phung Tung said that Vietnam should soon find its place in the race of global trade strategy.
@ Zing News
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Source: Vietnam Insider