Key Apple Partners Set to Increase Production in Southeast Asia

partners Foxconn Technology Group and Pegatron have announced plans to expand in Southeast Asia in 2023 as part of their efforts to mitigate geopolitical and economic risks. Foxconn chairman Liu Yang said at a company event that we will continue to expand our China, the Americas and Southeast Asia, these efforts will bear fruit in 2023.

Pegatron, Foxconn’s smaller rival, will allocate $300 million to $350 million for capital spending this year, in part to increase capacity in Southeast Asia and auto parts production in Mexico. The company is also a supplier to Tesla Inc. Both Foxconn and Pegatron currently produce iPhones in China and India, and is also using Vietnam as an alternative manufacturing base for other products such as AirPods. Pegatron will increase production capacity in Vietnam and Indonesia, they already have existing factories, the company currently Apple products are not manufactured in these two countries. Foxconn did not specify which Southeast Asian countries it plans to expand in.

The expansion plans by these major contract electronics makers fit into an ongoing trend of diversifying supply chains that began in the Trump era, when the U.S. president imposed steep tariffs on some Chinese imports in his trade war with China. This China’s prolonged coronavirus-induced lockdown has disrupted supply chains and accelerated diversification efforts.

Both Foxconn and Pegatron have experienced Covid-related disruptions in China. Pegatron had to temporarily suspend production, and Foxconn was challenged by a violent protest that swept through its main complex in the city of Zhengzhou, disrupting the iPhone maker’s activities and forcing to halt production. Warning shipments may be lower than expected.

The expansion plans of Foxconn and Pegatron in Southeast Asia in 2023 suggest that the world’s major contract electronics manufacturers will continue to increase production capacity outside China to mitigate geopolitical and economic risks and diversify their supply chains.




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