Trade hostilities against China and unpredictable US politics has led manufactures to shift production to neighbouring countries like India, Vietnam and Mexico. Manufacturers took this step to avoid being slapped with punitive tariffs and to mitigate future sanctions risk.
According to Bloomberg, Apple Inc., the largest of the many tech giants that are dependent on Chinese factories to make their gadgets, will move some production of its iPads and MacBooks to Vietnam. As such Foxconn has allocated $270 million in new investments to the Southeast Asian country. Young Liu, the Company’s Chairman, had said in August that the likes of India and Vietnam, and the Americas could each in the future end up with a dedicated manufacturing ecosystem of their own. He observed that the trend looks irreversible as other countries including India and Vietnam are boosting their infrastructure and efforts to lure manufacturers through lower costs and fewer geopolitical worries.
Dang Wang, a technology analyst at Gavekal Dragonomics, said that as China gets more expensive and as US politics have been unpredictable, companies have shifted production of some goods out of China. “That trend will continue as China gets more expensive and as Vietnam and India improve their competitiveness.” Apple is continuing to add iPhone capacity in India through its assembly partners, backed by Prime Minister Narendra Modi’s policy to attract top-tier smartphone companies to make their gadgets locally for export. Moreover, earlier this month, Pegatron Corp., announced that it is pumping $150 million into its Indian unit and will start production late 2021.
Furthermore, Wistron Corp., a Taiwanese contract manufacturer that handles iPhone orders, is eyeing India. It regards India as a key strategic site for the next decade due to its market size and resources.