Apple Shifts Some Production From China to Vietnam

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00:00Apple is preparing to expand its manufacturing operations in Vietnam as part of a push

00:04into the smart home market and an ongoing effort to really lessen its dependence on China.

00:09So let's get to it. Mark is managing editor for Global Consumer Tech. He's out there on the West

00:13Coast. Well done. Well done. What's going on here? Yeah, thank you so much for having me. So

00:20to your point, Apple is preparing to expand manufacturing operations in Vietnam. They are

00:26developing a series of new smart home devices for next year and for 2027. One is a smart home hub.

00:33We've talked about it a million times, I think, to compete with the Amazon Echo. The other is a

00:38tabletop robot, which would compete with some devices that are now becoming quite popular in

00:42China. And they're also working on a smart home privacy centric security camera that would compete

00:48with Ring and Nest and all those other companies that make security equipment. These are going to

00:54be built, first and foremost, in Vietnam. They're working with a company called BYD. They're

00:59otherwise known as a China electric vehicle manufacturer. They're actually quite popular

01:05in Asia. They also do some mass manufacturing for Apple, though, out of Vietnam. And they'll be

01:11handling these devices. They already make some iPads for Apple, but this is going to be a significant

01:15expansion of the BYD business for Apple. But more importantly for Apple, an expansion in Vietnam,

01:21as you know, whenever they come out in major new product categories, they usually kick things off

01:26in China. So this is a bit of a shift.

01:28Mark, I'm curious sort of what the Apple supply chain looks like geographically. So you've mentioned

01:33the importance of China, obviously Vietnam, incredibly important now in light of what you've

01:38been reporting. But I know that they make things in India. They make stuff in Malaysia, Thailand as

01:43well. So how do they think through the way that their supply chain looks now and how it should look

01:49in light of the kind of trade uncertainty that we've seen them having to grapple with like so

01:52many companies?

01:54Here are the broad strokes. China production is for China and everywhere but the United States.

02:01United States production is elsewhere. Obviously, this is because of the tariff situation and the

02:06global politics and what have you. So India has become the iPhone base for the U.S. Vietnam,

02:13it's the Apple Watch, it's the home devices, it is the AirPods. And then for Macs, you're seeing a lot

02:19of production happening in Thailand. You're seeing some production happening in Malaysia and some in

02:26Vietnam as well. It's expected to occur there. And then Indonesia, very small player. They're making

02:33some mesh fabric for Apple products, including the AirPods Max headphones. So the supply chain has gone

02:39under a rapid expansion across Southeast Asia over the past couple of years.

02:45Hey, one thing I want to ask you, Mark, is it sometimes feels like some mixed signals. Like

02:49we're, you know, we've got BYD, it's a Chinese company. So Apple is working with them on these

02:55products and yet at the same time moving manufacturing to Vietnam. So is that Apple kind of

03:01giving China something yet doing something else? Like I always think they manage that relationship

03:07very carefully. I mean, to be fair, Foxconn is a Taiwanese company and they're based in China and

03:14all of their manufacturing is primarily done in China. They've expanded to India and Vietnam and

03:21what have you. So in terms of where the company, you know, originated and where it's based versus where

03:26they do manufacturing, that's not as relevant. What's more relevant is that Apple has to sell the idea

03:32to the Chinese government that they're not backing down from China, even if they're diversifying outside

03:38of China. And the way they do it is continue to build for China and everywhere outside of the U.S.

03:45in China. And that's not to say they're not doing anything for the U.S. in China. My new iPhone 17 Pro Max,

03:52obviously, I live in the United States. It was built in China. So they're still doing some.

03:56Um, but that's really for the first wave of the new devices over the next few months or so. You'll

04:02see a lot of that 17 production for the U.S. shift back to India. As you said, though, the onus on Tim

04:08Cook and Apple to to say to Beijing, listen, China, we're not backing down. But are they backing down?

04:14Mark, as you look at it, it kind of feels like they're backing down a little bit.

04:20I think it's a bit of a yo-yo effect here. I don't think anything is set in stone.

04:24Uh, Apple is moving as the wind blows. And right now the wind is blowing, uh, in the

04:30sense that they need to get manufacturing for the U.S. because of tariffs outside of

04:33China. There will be another administration at some point. There will be tariff changes

04:38during this administration. And so they're going to shift as necessary. They've built

04:43the supply chains to be fairly agile, where they can move layers of production in between

04:49countries. They have all the facilities there and they can crank up that percentage of what

04:53needs to be done in Vietnam, crank down the percentage of what needs to be done in China

04:56and just go as the wind blows. As you know, really 2026 is going to be the year of the

05:02tariff impact because so far it's been negligible for Apple. The hit has been just like a few

05:07billion dollars, which is essentially nothing compared to the amount of revenue they bring

05:11in. They are getting some reprieves from Trump. Obviously they did the dog and pony show

05:15around the glass shift, uh, from China to, to the U S but certainly there's going to be

05:21more movement to come as well. And so they'll shift as necessary. And I think, uh, the word

05:26of the day should be agile because they're, they're moving as they need to.

05:30Mark, let me ask you lastly here, 2026, the year of the tariffs, um, the year of all of

05:33these devices as well underpinned by this new Siri. And we've seen some delays on that and

05:39some difficulty getting that ready for, for prime time. In your piece, you kind of lay

05:44out what the ideal timeline is for Apple going forward here. I wonder, as you think

05:48about this and as you talk to your sources, is there a sense that they're going to be

05:51able to stick to it or are those delays going to be kind of prologue for, for what's to

05:55come here in, in 2026?

05:57No, I think this is it. I mean, these new home devices, particularly the first one, the

06:01home hub that I mentioned that was supposed to come out last March or March earlier this

06:06year. Now it's going to come out in March, April of 2026. I would say it's going to be

06:10disastrous if they miss that March target. I don't anticipate them

06:13missing it. I think they're getting out, getting it out the door one way or another.

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