Apple Supplier Goertek To Set Up Vietnam Unit

Key Apple supplier Goertek said on Monday it would invest $280 million (£221m) to create a wholly-owned subsidiary in Vietnam as Apple looks to diversify its supply chain outside China.

The move is aimed at meeting demand for “business expansion and long-term operation”, the Chinese assembler said in a filing with the Shenzhen Stock Exchange.

It said the Vietnamese entity would manufacture consumer electronics products including AirPods, smartwatches, virtual reality and augmented reality gear in line with Goertek’s future plans as well as client demands.

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

Vision Pro headset

Goertek is one of Apple’s main mainland Chinese suppliers of its mixed-reality Vision Pro headset, which is to launch in early February.

The Vietnamese subsidiary is to be set up through Goertek’s Hong Kong entity and is expected to be located in northern Bac Ninh province, which has seen investment from South Korean firms including Samsung Electronics.

South Korean companies have set up plants for everything from smartphones to semiconductors and precision mechanical manufacturing equipment in the province, according to the Vietnam Chamber of Commerce and Industry.

Tim Cook established China at the centre of Apple’s supply chain under Steve Jobs before taking over himself as chief executive, but the company has been forced to explore alternatives since Covid-19 policies caused manufacturing disruption and product shortages ahead of the Christmas shopping season in 2022.

Global supply chain rethink

Goertek’s outgoing Vietnam business chief, deputy chairman Kazuyoshi Yoshinaga, in March told Bloomberg that large US manufacturers were pressuring Chinese suppliers to find alternative production bases outside the country, in places such as Vietnam and India.

The broader supply chain disruptions of the Covid-19 period highlighted the world’s reliance on manufacturing in China, causing shortages of everything from smartphones to cars, and leading to a broad rethink that is still ongoing, and which has grown to include US sanctions aimed at choking off the supply of advanced technology to China.