During an audience with Prime Minister Pham Minh Chinh on the morning of April 16, Apple CEO Tim Cook pledged to purchase more components manufactured by his partners in Vietnam.
Mr. Cook said that Apple was ready to work with Vietnam to promote high-quality cooperation and investment activities in the time to come.
Prime Minister Pham Minh Chinh said that Vietnam would coordinate with Apple to establish a working group to support Apple in investing and expanding its operations in Vietnam. The Prime Minister also asked Apple to assist Vietnam in developing a high-quality workforce.
Prime Minister Pham Minh Chinh receives Apple CEO Tim Cook on the morning of April 16 in Hanoi. Photo: AP
During his two-day visit to Vietnam (April 15-16), Apple CEO Cook also met with local users, developers, and content creators.
Apple seeks to diversify supply chain
The visit to Vietnam took place at a time when Apple is facing multiple challenges. According to data released by the International Data Corporation (IDC) on April 15, global iPhone sales in the first quarter of 2024 decreased by 10% year-over-year. Apple is facing increasing competition in the high-end smartphone market, especially in the key market of China.
IDC’s latest report reveals that Apple’s shipments in Q1 2024 reached 50.1 million units, down 9.6% from 55.4 million units in the same period last year. The report shows that among the world’s top 5 smartphone brands, Apple suffered the steepest decline in year-over-year growth.
Samsung regained the top spot in Q1 this year with a 20.8% market share and 60.1 million units shipped. Compared to Q1 2023, Samsung’s market share decreased slightly, from 22.5% to 20.8%.
Although Apple had surpassed Samsung to become the world’s largest smartphone maker in 2023, Apple’s market share declined from 20.7% to 17.3% in the first quarter of this year.
In 2022, as the US government scrutinized the country’s reliance on Chinese-made products as well as China’s strict COVID-19 containment measures, iPhone production at Foxconn’s China factory was severely affected. Foxconn is a major iPhone manufacturing partner for Apple, while other factories in China are also involved in the development and production of the MacBook, iPad, and Apple Watch.
Japanese news agency Nikkei reported in December 2023 that Apple was shifting some critical engineering resources for iPad development to Vietnam.
According to Nikkei, Vietnam holds great significance for Apple. This is not only because of the growing number of Apple enthusiasts in Vietnam, but also because Apple is diversifying to mitigate supply chain risk instead of relying solely on China for its entire manufacturing operations.
Bryan Ma – Vice President of Client Devices Research at the International Data Corporation (IDC) – said that Samsung Electronics has long operated in northern Vietnam, and now Apple has started to pay attention to key regions like Vietnam.
“Apple’s diversification efforts also include the production of devices like laptops, and contract manufacturers such as Foxconn have invested in these areas,” said Mr. Ma.
According to IDC data, Apple has gradually emerged as the third-largest smartphone vendor in Vietnam, behind only OPPO and Samsung. This is a sign that Apple is seeking to assemble its products in countries other than the world’s second-largest economy – China, of which Vietnam is already a major manufacturing base.
400 trillion VND invested in Vietnam
Coinciding with CEO Cook’s visit to Hanoi, Apple released a statement on its official website in Vietnam, announcing increased investment in the supply chain in Vietnam.
According to the data provided in the announcement, Apple’s cumulative investment in Vietnam through its supply chain partners since 2019 has exceeded 400 trillion VND (15.8 billion USD).
More importantly, Apple’s investment in Vietnam is accelerating. Starting from 2019, the company’s annual investment in Vietnam has doubled. Apple’s supply chain in Vietnam has now created more than 200,000 jobs, including Apple employees, local suppliers, and app developers in the iOS ecosystem in Vietnam.
Apple’s supply chain in Vietnam has now created more than 200,000 jobs. Photo: AFP
Apple’s investment activities in Vietnam began more than 10 years ago. Today, Vietnamese suppliers have become a significant force in Apple’s global supply chain, and many of them are subsidiaries established in Vietnam after global manufacturing giants joined Apple’s supply chain.
Looking at Apple’s list of manufacturing partners in fiscal 2022, global powerhouses such as Hon Hai Precision Industry, BYD, Goertek, Intel, Lens Technology, Luxshare Precision, Samsung Electronics, and LG Display have set up factories in Vietnam to manufacture products for Apple.
Apple’s manufacturing partners assemble iPads, wireless headphones, watches, HomePods, and some semiconductor components in Vietnam.
According to Chinese news site East Money, Hon Hai was rumored to have started assembling Macbook computers in Vietnam from mid-2023, but this information has not been confirmed. Amidst declining iPhone sales, the iPad and Mac product lines, which are set for major upgrades, will also shoulder a more important revenue-generating responsibility.
As the local supply chain gradually strengthens, consumer business is also growing. Apple launched its online store in Vietnam in May last year and Apple Pay in Vietnam in August.
Apple is also recruiting programmers to enhance the Vietnamese language capabilities of its voice assistant Siri and to support the localization of Apple Maps in Vietnam.
East Money believes that Vietnam is one of the key links in Apple’s expanding manufacturing footprint. For Apple, besides common advantages such as demographics and labor costs, Vietnam’s proximity to China – the “headquarters” of Apple’s manufacturing supply chain – also makes it more convenient to connect the supply chain.
According to Bloomberg, Apple is seeking to move its manufacturing for its devices out of China to reduce geopolitical risk. They are exploring countries such as India and Vietnam—which have seen a four-fold increase in companies assembling Apple products over the past decade.
India has become Apple’s second-most important iPhone manufacturing hub after China. According to Bloomberg, one in seven iPhones is made in India. Since 2022, Apple has assembled its most recent iPhone lineups in India, which at that time was the iPhone 14 series. For Apple, India also represents a huge consumer market.
