Tim Cook, Apple’s chief executive, has begun his two-day visit to Vietnam, which comes as the US tech giant’s efforts to diversify its supply chain come under renewed scrutiny., just a few weeks after wrapping off a trip to the company’s primary market of China, according to a report.
TakeAway Points:
- Apple CEO Tim Cook arrived in Hanoi, Vietnam, for a 2-day visit as the US tech giant’s efforts to diversify its supply chain came back into focus.
- According to IDC, Apple has gradually emerged as the third-largest smartphone seller in Vietnam in terms of shipments and has established itself as a major hub for the production of goods like the MacBook.
- However, according to market consultancy Counterpoint, Apple sales fell 24 percent year over year in the world’s largest smartphone market.
Tim Cook Visits Vietnam
Apple said on its Vietnam website yesterday that it would “raise spending on suppliers” in the nation. Since 2019, the company has spent close to 400 trillion Vietnamese dong, or US$16 billion, on suppliers.
Following Cook’s visit to China, which continues to be Apple’s largest production base, the vow was made three weeks ago. At the time, Cook declared that the company would continue to invest in R&D and the supply chain in China, praising the nation’s supply network as the most “critical” in the world.
He also attended the high-level China Development Forum, the nation’s answer to the World Economic Forum’s summit in Davos, Switzerland, where he lauded the “huge contribution” that Chinese suppliers have made to the iPhone maker’s carbon-neutral goals.
Despite Cook’s reassurance, some Chinese internet users expressed their uneasiness about Apple shifting some of its manufacturing to countries such as Vietnam and India.
One Weibo user called “eddzccy” commented on a post about Cook’s Vietnam visit with a three-lemon emoji, which symbolises jealousy. Another user named “Renkongzhineng” sarcastically referred to Cook as a “master of marketing.”
Vietnam, Apple’s third-Largest Vendor
Apple has quietly grown into Vietnam’s third-largest smartphone vendor by shipments, according to IDC, behind Chinese electronics maker Oppo and Samsung. And Vietnam has become a key location for manufacturing as the Cupertino giant looks to diversify the assembly of its products away from China, with suppliers including Luxshare Precision Industry, Goertek, and Foxconn Technology Group, formally known as Hon Hai Precision Industry, all having operations there.
“Vietnam is important to Apple not only due to its growing base of fans there, but also because the industry is hedging its bets by diversifying its manufacturing beyond China. That includes key locations like Vietnam, where Samsung has long had a presence in the northern part of the country,” Bryan Ma, vice president of client device research at IDC, told CNBC.
The US has strengthened its relationship with Vietnam amid growing tensions between Washington and Beijing. In a visit to the Southeast Asian country last September, US President Joe Biden announced an elevated “comprehensive strategic partnership” with Vietnam.
Apple Sales Declines in China
Still, Apple has doubled down on a variety of initiatives in mainland China, the world’s largest smartphone market, where iPhone sales fell 24 percent year on year in the first six weeks of the year, according to market consultancy Counterpoint.
The company faces “stiff competition at the high end [of the market] from a resurgent Huawei [Technologies], while getting squeezed in the middle on aggressive pricing by the likes of Oppo, Vivo, and Xiaomi,” said Counterpoint.
Apple said in March that it planned to expand its research centre in Shanghai and open a new laboratory in Shenzhen later this year.
It is also exploring a tie-up with Chinese internet search and artificial intelligence giant Baidu to install the latter’s Ernie chatbot on iPhones sold in the country, according to a report last month by The Wall Street Journal.
