Goertek to open Vietnam factory for Apple’s supply chain diversification

Apple supplier Goertek said on Monday it would invest up to US$280 million to establish a wholly-owned subsidiary in Vietnam to meet demands for “business expansion and long-term operation” in the Southeast Asian nation, according to a corporate filing.

Goertek’s Vietnamese entity, which will manufacture consumer electronics products, from AirPods and smartwatches to virtual reality and augmented reality gear, is a project that will meet both the Chinese assembler’s future development plan and client demand, it said in the filing to the Shenzhen Stock Exchange.

“[The project] is advantageous to make better use of local resources in Vietnam to enhance the company’s overall competitiveness,” Goertek said.

The company has been tapped by Apple to become one of the major mainland suppliers of its mixed-reality Vision Pro headset, which is set to launch in early February.

The Vietnamese subsidiary, which will be set up through its Hong Kong entity Goertek (Hong Kong) Co, is expected to be located in northern Bac Ninh province, which has attracted investment from a raft of South Korean firms including consumer electronics and semiconductor giant Samsung Electronics.

South Korean firms have emerged as major investors in that province, setting up factories for electronics, smartphones, semiconductors and precision mechanical manufacturing equipment, according to the Vietnam Chamber of Commerce and Industry.

Goertek’s latest move comes as Apple is starting to shift more of its production outside China, a move that came after Beijing’s stringent Covid-19 restrictions during the pandemic disrupted the US firm’s manufacturing supply chain, impacting its global sales in the lead up to the Christmas shopping season in 2022.

Since then, Apple has encouraged its contract manufacturing partners to diversify into other countries, including Vietnam, to reduce its reliance on China.

Apple suppliers, including Taiwanese electronics contract manufacturer Foxconn Technology Group, have invested up to US$16 billion to reduce their dependence on China, by relocating facilities to India, Vietnam, Mexico as well as the US, according to a report by AppleInsider, citing research by investment bank TD Cowen.

Foxconn, formally known as Hon Hai Precision Industry and the world’s biggest maker of iPhones, late last year announced a plan to invest US$1.6 billion in India to expand its presence in the South Asian nation. South China Morning Post