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Foxconn expands Vietnam factories, perhaps to help Apple diversify beyond China

Zhengzhou is lovely this time of year, Bac Giang could be nicer still

Electronics assembler for the stars Foxconn has signed a $62.5 million lease on 45 hectares of land in an industrial park in Vietnam's Bac Giang province, as tech manufacturing operations continue to shift out of China.

The information was revealed late on Tuesday in a filing with the Taiwan Stock Exchange from the massive manufacturer – also known as Hon Hai Precision.

The lease was issued to Foxconn subsidiary Fulian Precision and runs until February 5, 2057. The facility's purpose is to meet "operational needs and expand production capacity."

The plot in question adds to an existing 50.5 hectares of land for which Foxconn signed an MOU last August, as reports emerged that it was in talks to move its Apple Watch and MacBook making biz out of China for the first time. The deal was expected to bring in 30,000 workers and represent $300 million in investment.

Bac Giang is a hub for Big Tech factories and Foxconn is thought to already work on the iPad and AirPod in the locale, which is also home to Apple and Samsung component suppliers and assemblers. In 2021, the town's factories had their share of COVID-related lockdowns and closures.

But it's not Vietnam's pandemic lockdowns that have spooked Big Tech with visions of supply chain disruptions. In late 2022, a slew of lockdowns and factory protests in China plagued production.

"COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China," reported Apple in November.

CEO Tim Cook said in this month's earning call that the challenges "significantly impacted" iPhone supply and the impact carried on through December, affecting the crucial Christmas period. iPhone revenues were reported down from $71.6 billion to $65.8 billion year-on-year.

Market research firm Counterpoint estimated that Foxconn's Zhengzhou factory – aka "iPhone City" – produced 85 percent of all iPhones prior to the 2022 shutdowns.

Although China abandoned its zero-COVID policy in mid December, many businesses continue to see the need to diversify out of the Middle Kingdom. The effects of sanctions also make it hard to import some tech product.

Ongoing efforts to diversify Apple's manufacturing go beyond Vietnam. Foxconn revealed at the end of 2022 that it was investing $500 million to expand its manufacturing presence in India – including semiconductors. The following month, a minister in India said Apple was seeking to expand its India operations to 25 percent – up from five to seven.

India is more than happy to court the investment, as it has pledged to quadruple its electronics manufacturing business by 2026. ®

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