Foxconn Considering Setting Up iPhone Factory in Vietnam

Foxconn is considering setting up an iPhone factory in Vietnam to avoid any issues due to the trade war between China and the United States. Apart from Vietnam, Foxconn is also considering Thailand as an option.

Vietnamese state media reports that Foxconn and Hanoi People’s Committee are actively discussing setting up an iPhone factory in the country.

“We are discussing the possibility of this with Foxconn,” Loc told Reuters, without elaborating. Hanoi People’s Committee Chairman Nguyen Duc Chung declined to comment.

While Foxconn did not confirm this move, it would be a bold move from the company if true. Setting up an iPhone factory in Vietnam or Thailand would require a considerable amount of effort from the company as apart from setting up the factory premises, it will also have to look for skilled labors and other supply chain equipment.

Our Take

Apple relies heavily on Foxconn for assembling iPhones. The latter wants to ensure that any rise in import tariff due to a trade war would be negated to a great extent by having its factories across different regions. Foxconn could very well also use its Vietnamese factory for assembling older iPhones and save on import tariff. Apple’s supplier Pegatron does exactly this in India where it has a factory outside of Bengaluru to assemble older iPhone models thereby bypassing high import duties.

For now, the United States and China have entered into a 90-day truce and agreed not to increase or lay additional import tariffs. It is likely that Foxconn will also take a final call on setting up an iPhone factory outside of China after analyzing the situation post this 90-day truce.

[Via Reuters]