Samsung, LG and many other technology giants have considered Vietnam as a production base, even a strategic base for research and development (R&D). Will Apple follow this path?
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| Foxconn, Pegatron, Winston, Goertek, Luxshare... have invested in large-scale projects in Vietnam. |
Deep into Apple's value chain
Billionaire Tim Cook, CEO of Apple (a company with a market capitalization of about 3,000 billion USD) has just visited Vietnam. A short visit, lasting only 2 days, but opened up expectations of billion-dollar investments in Vietnam from the manufacturing partners of the world's largest technology company.
During a meeting with Prime Minister Pham Minh Chinh , the top powerful figure at “Apple” said that Apple committed to purchasing more components produced by partners in Vietnam, while supporting Vietnam in the field of innovation; increasing spending for suppliers in Vietnam... The figure that Mr. Tim Cook shared was that from 2019 to now, Apple has spent about 400,000 billion VND (equivalent to 16 billion USD) for about 150 suppliers in Vietnam.
Appreciating the important contributions of Apple and its partners to Vietnam's development, especially in creating jobs and bringing Vietnam deeper into Apple's global supply chain, the Prime Minister asked Apple to focus on investing in development, expanding business operations, and identifying Vietnam as a stronghold of Apple globally...
No commitments have been made yet, but it is clear that Vietnam is becoming increasingly important in Apple's global supply chain.
Apple - unlike Samsung or LG, does not have a factory that directly manufactures products, but usually through original equipment manufacturing (OEM) partners, mainly in China, India... Since the US-China trade war and especially after Covid-19, Apple has had clear strategies on shifting production to Vietnam. Right at the time of Covid-19, Apple leaders had many online meetings with the Ministry of Planning and Investment, to promote the shift of production chains to Vietnam.
This plan has become a reality and that is why in recent years, Foxconn, Pegatron, Winston, Goertek, Luxshare... have invested in large-scale projects in Vietnam. Initially, it was only the production of components, then products such as AirPod, Macbook...
Even late last year, it was reported that Apple would partner with BYD to transfer iPad product development (NPI) resources to Vietnam. The technical assessment process for trial production of this iPad model is expected to be completed in the second half of 2024.
BYD began investing in Vietnam in September 2021, with a factory in Phu Tho worth 269 million USD, and last year increased its capital to 413 million USD. That is where BYD manufactures and assembles iPads for Apple.
But manufacturing, assembling, and transferring NPI are two different things. NPI requires significant resources from both Apple and its suppliers, not just in terms of engineers, but also in terms of labs to test new product features. Currently, most of this process is done in China, with the cooperation of engineers from Apple’s headquarters. For the first time, Apple is moving NPI to Vietnam, demonstrating how important Vietnam is in Apple’s supply chain.
At the time, Counterpoint Research technical analyst Ivan Lam told Nikkei Asia Review: “Apple’s recent supply chain map demonstrates the capability of its Vietnam facility to manufacture and expand iPad production.”
When is the "base"
BYD is not the only Apple OEM manufacturer present in Vietnam. According to a report by the Ministry of Planning and Investment, Apple operates in Vietnam mainly through 70 factories of its OEM partners, specializing in manufacturing electronic components and assembling Apple products.
A very remarkable figure is that the export value of Apple products in Vietnam has increased rapidly, from about 20 billion USD in 2020 to 26 billion USD in 2021 and 30 billion USD in 2022. This is proof that Apple is really shifting its supply chain and production to Vietnam.
No commitments have been made yet, but it is clear that Vietnam is becoming increasingly important in Apple's global supply chain. 
Corresponding to the growth in export turnover is the growth in investments by Vietnamese OEM partners. Foxconn has invested more than 3 billion USD in Vietnam, with large-scale factories in Bac Ninh and Bac Giang. Meanwhile, Luxshare has continuously increased its investment capital in Bac Giang and Nghe An. Last year alone, Luxshare invested an additional 330 million USD to raise its total investment capital to more than 500 million USD in Bac Giang. In Nghe An, the company has invested nearly 360 million USD to build a factory specializing in the production of electronic devices.
Meanwhile, Goertek is also continuously investing in expansion in Bac Ninh and Nghe An. In Bac Ninh alone, Goertek has invested about 1.3 billion USD and is planning to increase its investment capital 3-4 times the current figure within the next 5-10 years.
Quanta, then Compal… also invested hundreds of millions of USD to build factories in Nam Dinh, Thai Binh. All are original equipment and component manufacturers for Apple.
The lack of manufacturing facilities makes it difficult to define where Apple’s “stronghold” is. But clearly, with the $16 billion spent on suppliers and Apple’s OEMs continuously expanding their investments in Vietnam, Vietnam is gradually becoming an important and indispensable link in Apple’s supply chain.
One by one, Apple's key products have been manufactured in Vietnam. The remaining dream is when will Apple choose to manufacture iPhones in Vietnam? This is something that Vietnam has been waiting for a long time, but the challenge is not small, because it is also related to the supply chain of components, which according to industry experts is "extremely large". Information shows that each Apple product has more than 2,000 components and therefore, the number of supplying companies must be up to 600. This number is not easy for Vietnam to meet.
However, opportunities still lie ahead, as Vietnam is the center of the global supply chain, investment flows are shifting here. And in the meeting with Mr. Tim Cook, the Prime Minister said that Vietnam is ready to coordinate with Apple to establish a working group to support Apple in investing and expanding operations in Vietnam quickly, strongly, sustainably, and long-term, contributing to promoting and concretizing the new framework of relations between the two countries Vietnam - the United States on the basis of "harmonious benefits and shared risks".
The path for Vietnam to become Apple's "stronghold" is still wide open...
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