Apple is planning to buy more components from Vietnam, underscoring a trend among global tech firms to look beyond China to secure their supply chains, cut costs and open up new markets.
CEO Tim Cook made the pledge in a meeting with Vietnamese Prime Minister Pham Minh Chinh in Hanoi Tuesday, according to a statement by Vietnam’s government.
Apple (AAPL) has already spent almost $16 billion through its supply chain in the country since 2019, the government quoted Cook as saying. And the company has created more than 200,000 jobs in Vietnam, it added.
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According to the statement, Cook said Apple “stands ready … to enhance cooperation and investment activities” in the Southeast Asian country.
His visit highlights Vietnam’s growing importance to global companies looking for alternatives to China as trade tensions between Beijing and the West have escalated in recent years.
Vietnam has been a “major beneficiary” of moves by multinational companies to diversify their manufacturing hubs — a strategy known as “China plus one” — says Thuy Anh Nguyen, a strategist at Dragon Capital, a local fund management firm that invests solely in Vietnamese
companies.
Nguyen, whose firm manages $6 billion in assets, told CNN that labor costs in Vietnam’s manufacturing sector are about half those in neighboring China.
That has helped Vietnam go from producing mostly “low-value products” like textiles to more tech products like iPhones and iPads, she said. “Those are higher-value items. That’s how we move up the value chain.”
Vietnam pulled in more than $4.29 billion in foreign direct investment during the first two months of the year, up almost 39% from the same period in 2023, according to the country’s Ministry of Planning and Investment. Most of the new investment went into the processing and manufacturing sector.
A ‘perfect landing spot’
In recent years, fast-growing Asian economies like Vietnam and India have emerged as alternative locations for manufacturers as ties between Beijing and the West have frayed.
Vietnam is “the perfect landing spot for tech companies to diversify outside China,” according to Dan Ives, a senior equity analyst at Wedbush Securities, who pointed to the high number of trained engineers in the country as one factor.
“We’re not just talking about (manufacturing of) low-cost electronics,” he told CNN. “We’re talking higher up the value chain… That was not even on the radar (of foreign companies)
two years ago.”
Once enemies in war, the United States and Vietnam have grown increasingly close — the value of US imports of Vietnamese goods soared more than 360% in the decade to end-2023 to top $144 billion, according to US government data.
Source: CNN
