Apple CEO Tim Cook reveals plans to invest more in Vietnam as part of its China Plus One Policy

As Apple continues to move away from China as part of its China Plus One policy, CEO Tim Cook has revealed that it will increasingly focus on Vietnam and broaden its relationship with suppliers in the country and invest more in the region.

This move comes shortly after Tim Cook’s two-day visit to Vietnam, during which Apple disclosed plans to enhance its supplier network in the country.

The decision to bolster manufacturing in Vietnam aligns with Apple’s ongoing efforts to reduce its reliance on China within its supply chain. This strategic shift has been underway for several years, prompted by disruptions in the supply chain during the pandemic era.

One notable incident occurred in 2022 when a factory owned by Foxconn, a key Apple supplier, shut down due to a COVID-19 outbreak amidst China’s strict zero-COVID policy and reports of labor issues. This closure reportedly resulted in a shortage of approximately 6 million iPhones, incurring significant financial losses for Apple.

Following this incident, Apple started looking for ways to diversify its supply chain across other countries in the region. Vietnam, after India has emerged as a significant destination for expanding its operations, where Apple already manufactures various products including AirPods, Apple Watches, and, more recently, iPads.

Several of Apple’s key suppliers, such as Foxconn and Luxshare, have also been solidifying their presence in Vietnam. Since 2019, Apple has invested around $16 billion in manufacturing capabilities in the country, according to state media.

Apple’s strategic shift mirrors broader trends in the United States, where there is a reassessment of trade relations with China due to concerns about unfair business practices.

President Joe Biden’s recent meetings with Asian leaders aimed to strengthen ties amidst increasing geopolitical tensions worldwide.

The trade relationship between the US and China has become strained, with both countries issuing pointed public statements and implementing trade policies targeting each other.

Additionally, the US government’s ban on Chinese firms from accessing advanced semiconductor technology, coupled with allegations of China flooding certain sectors with cheap goods, has escalated tensions further.

Amidst these developments, Apple has faced declining sales in China, with iPhone sales down by 24 per cent compared to the previous year. This decline in sales, along with increasing competition from Chinese smartphone brands, has contributed to a 10 per cent drop in iPhone shipments in the first quarter of this year. As a result, Apple lost its position as the world’s top smartphone seller to Samsung.

(With inputs from agencies)