AirPods maker GoerTek Inc. is one of the many manufacturers exploring locations beyond its native China, which today cranks out the bulk of the world’s gadgets from iPhones to PlayStations. It’s investing an initial $280 million in a new Vietnam plant while considering an India expansion, Deputy Chairman Kazuyoshi Yoshinaga said in an interview. US tech companies in particular have been pushing hard for manufacturers like GoerTek to explore alternative locations, said the executive, who oversees GoerTek’s Vietnamese operations from northern Bac Ninh province.

The expanding conflict between the US and China, which began with a trade war but has since expanded to encompass sweeping bans on the exchange of chips and capital, is spurring a rethink of the electronics industry’s decades-old supply chain. The world’s reliance on the Asian nation became starkly clear during the Covid Zero years, when Beijing’s restrictions choked off the supply of everything from phones to cars.

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Apple’s suppliers rarely comment on its thinking, in part because of the US company’s famous insistence on secrecy across its global supply chain.

‘Move out of China’ pressure on AirPods supplier

Bloomberg reports that Apple suppliers are accelerating efforts to relocate production outside of China, and one AirPods maker says that its clients are asking about it almost daily.

AirPods maker GoerTek Inc. is one of the many manufacturers exploring locations beyond its native China […] It’s investing an initial $280 million in a new Vietnam plant while considering an India expansion, Deputy Chairman Kazuyoshi Yoshinaga said in an interview.

US tech companies in particular have been pushing hard for manufacturers like GoerTek to explore alternative locations, said the executive, who oversees GoerTek’s Vietnamese operations from northern Bac Ninh province.

“Starting from last month, so many people from the client side are visiting us almost every day,” Yoshinaga said from his offices at GoerTek’s sprawling industrial complex north of Hanoi. The topic that dominates discussions: “When can you move out?”

While GoerTek is a less well-known brand than Foxconn, it is a massive Apple supplier. It also looks set to make Apple Headsets in Vietnam from next year.

Yoshinaga says that US companies are applying similar pressure to most of their Chinese suppliers.

Photo: The Wall Street Journal

Most Chinese tech manufacturers are experiencing the same pressure. “I would say currently 90% of them, they’re looking at that,” he added. “It’s the brand companies’ decisions.”

While the trade war with China begun under the previous US administration was a major spur to accelerate plans, ongoing COVID-19 disruption, trade sanctions, and the recent row over the Chinese spy balloon(s) have also seen an increase in tension between the two countries.

For now, Vietnam remains an attractive location. Apple may be looking to make the country a manufacturing hub for AirPods, iPads and MacBooks. AirPods orders are dominated by GoerTek and fellow Chinese firm Luxshare Precision Industry Co., which too has a complex in north Vietnam.

Many US companies are planning to shift production there, regardless of cost, Yoshinaga said. Others like Jabil Inc. are considering India. But overall, the flow is consistently going to be outward from China, he said.

“I don’t think it’s going to return. It’s one-way.”

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