Apple has been diversifying its supply chain and moving production of some of its products to Vietnam following the US-China trade war and the pandemic. However, the company will be mass-producing the AirPods 3 in China, contrary to its original plan of getting them manufactured in Vietnam.
Apple already manufactures the AirPods Pro and the 2nd gen. AirPods in Vietnam following the US-China trade that started in 2019. It also planned to produce the AirPods 3 in Vietnam, but it has been forced to change its plans due to a rise in COVID cases in the country.
As per the Nikkei Asia report, Apple eventually still hopes to move at least 20 percent of AirPods 3 production to Vietnam.
Apple also intends to move MacBook and iPad production to Vietnam, but its plans are currently on hold due to the lack of a proper supply chain, increasing COVID cases, and lack of engineering resources.
The lack of engineering resources has also affected Google and Amazon, who have moved the production of some of their products to Vietnam. While Vietnam has a young labor force, companies send their engineers from China and neighboring countries for new product introductions. However, with China and Vietnam both adopting stricter border control measures, the production of new products is getting hampered.
“[Vietnam’s] engineering workforce is still far from adequate,” an industry executive said. “With all the travel restrictions, it’s only feasible to make products in Vietnam that are already in mass production elsewhere, rather than starting production of upcoming products from scratch in the country.”
IDC analysts believe that any setback for Vietnam will only be temporary as it has already managed to establish itself as an alternative manufacturing hub.
[Via Nikkei Asia]
“We noticed there are some impacts on production lines and a slowdown in shifting of production capacity due to COVID-19 resurgence and government measures. However, we don’t think the Vietnamese government will adopt such strict measures for very long, otherwise it will affect its own economy and its rising manufacturing prowess,” IDC analyst Hsu said.