Vietnam a favourite destination for global tech giants

Producing electronic components (Photo: VNA)

Hanoi (VNA) – Vietnam is again in the spotlight after Apple’s move to shift production activities to the Southeast Asian country, according to a TRT World page of the Turkish Radio and Television Corporation.

This move shows that Vietnam has emerged as a preferred manufacturing destination for global tech giants.

For the first time, Apple – a tech giant headquartered in California, the US has asked its suppliers to move their iPad manufacturing out of China to Vietnam, as more than half of Apple’s main suppliers located around the Chinese city of Shanghai were affected by COVID-19 lockdowns.

The lockdowns disrupted supply chains of various tech products, prompting the iPhone maker to find alternatives, it said, adding that an iPad assembler has already built assembly lines in Vietnam.

Nikkei Asia reported on June 1 that this is the first time Apple has decided to move part of its iPad manufacturing from China to Vietnam. It worked with China’s BYD to build an iPad production line in Vietnam, which is expected to become operational soon.

Apple is already sourcing its AirPod earpieces from the Southeast Asian economy, which has registered sustained economic growth in the past two decades.

Vietnam has placed itself as a favourite destination for outsourcing manufacturing since the country adopted economic reform in the 1980s. A number of garment and shoe makers moved their production lines from China to Vietnam after 2007.

But where Vietnam has really made its presence felt in the past decade has been in its ability to attract foreign direct investment (FDI) in factories that are assembling and manufacturing tech products from smartphones to TV components.

The Republic of Korea (RoK) and Japan – home to some of the biggest technology names – accounted for 376 billion USD in FDI poured into the Vietnamese manufacturing sector between 2015 and 2020, according to one study.

Intel opened a large chip assembly facility in Ho Chi Minh City in 2010 while last year the RoK electronics giant LG invested more than 1 billion USD to increase OLED display output at the port city of Hai Phong.

Even before the COVID-related supply chain disruptions, rising tension between US and China had prompted tech companies to shift production to other countries, notably Vietnam.

According to an analysis of Nomura – a Japanese investment bank, Vietnam’s economy was boosted by almost 8% due to the shift in production during the trade war.

Vietnam’s manufacturing sector has grown in double digits before the pandemic caused disruptions globally. Samsung already accounts for a quarter of Vietnam’s exports while Intel has set up its biggest chip assembly plant there.

All of this has helped Vietnam, a country of 100 million people, become one of the fastest-growing economies in the world.

During his working trip to attend the US-ASEAN Special Summit in Washington and visit the US in early May, Prime Minister Pham Minh Chinh met with officials of many large technology corporations to introduce investment prospects in Vietnam, especially in the high-tech sector.

Prime Minister Pham Minh Chinh visits Apple headquarters (Photo: VNA)

During a meeting with Prime Minister Pham Minh Chinh at Apple's headquarters in California, CEO Tim Cook said that the group wishes to expand the supply chain in the Vietnamese market and coordinate with Vietnamese businesses eligible for participating in Apple's value chain.

There are predictions that Vietnam’s economy can overtake Singapore within a few years if it's able to maintain the current growth trajectory, TRT World reported.

Oxford Economics forecast that around 4% of global electronic exports will come from Vietnam by 2025./.