Foxconn mulls Vietnam move for iPhone production to avoid effects of U.S. tariffs

Posted:
in iPhone edited December 12
Apple assembly partner Foxconn is reportedly considering the possibility of setting up a new facility in Vietnam, a move that could potentially prevent the iPhone from being hit by tariffs created by the Trump administration in its ongoing trade war with China.

Apple CEO Tim Cook at a Chinese Foxconn factory.
Apple CEO Tim Cook at a Chinese Foxconn factory.


Head of the Vietnam Chamber of Commerce and Industry Vu Tien Loc is said to have raised the possibility with Prime Minister Nguyen Xuan Phuc of opening a Foxconn factory in Vietnam specifically for iPhone production, according to Reuters citing a Vietnam Investment Review report from Monday.

Loc confirmed talks were underway, advising "We are discussing the possibility of this with Foxconn." The company itself advised it does not comment on matters "related to current or potential customers, or any of their products."

In a note to investors seen by AppleInsider, Morgan Stanley's Katy Huberty suggested that a finishing plant, one with a single-step in the assembly or one intended for final packaging, would not skirt tariffs.

"It is our interpretation that Apple would have to do more than just one stage of final assembly outside China for the origin of the good to shift away from China," wrote Huberty. "[This] would then likely require billions of dollars of investment from Apple and partners over a multi-year period, making this a more disruptive scenario."

A number of Foxconn executives spoke to Reuters in the last week about where production could be moved through, if the company needed to mitigate the effects of the U.S.-China trade war. Vietnam and Thailand were seen as the preferred locations to set up operations, though a lack of skilled labor and inadequate infrastructure would be an issue in either case if such a move was made.

The fresh examination of new bases of operation for Foxconn follow after an interview with President Donald Trump in late November, where he signaled an intention to move ahead with tariffs on $200 billion of goods imported from China, if discussions with Chinese President Xi Jinping failed to bear fruit.

The administration has frozen another round of tariffs, pending further discussion and negotiation, that would apply to all remaining goods not already on the import list, bringing iPhones under the same levy. A levy of 10 percent could be applied to iPhones if it does proceed, which analysts suggest could raise the cost of an iPhone by between $60 and $160, if it is passed on to consumers instead of being taken out of Apple's profits on the sale.

Shifting production to another country has the potential to avoid the tariff, but rules require the product to be substantially transformed for it to be counted as produced elsewhere, so shipping almost-completed goods from China to Vietnam for final finishing touches isn't enough of a change. Add that China is one of the few countries capable of offering a large and low-cost labor force in a single location, and moving production to a new country becomes a potentially expensive and futile endeavor.

Comments

  • Reply 1 of 19
    MacProMacPro Posts: 17,778member
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    techprod1gycornchipfranklinjackconbadmonkjony0
  • Reply 2 of 19
    Since everyone is blocked from posting on "certain" articles I will post it here.  I find it very amusing that the very people that rely on "free speech" block that very thing on their own site.  What you are saying is our opinion does not matter.  Ban the trolls but don't ban discussion on sensitive issues.  It is "not the right thing to do".
    wd4fsucornchipchristophbjbdragonJWSCboltsfan17jony0
  • Reply 3 of 19
    wood1208wood1208 Posts: 1,638member
    What a company got to do, it got to do. Strategically, USA/European tech companies are better off manufacture products somewhere else who don't steal IP,copy there products and sells back cheap. China is going to drain everyone to become world's largest manufacturer and economic superpower.
    jbdragon
  • Reply 4 of 19
    wood1208 said:
    What a company got to do, it got to do. Strategically, USA/European tech companies are better off manufacture products somewhere else who don't steal IP,copy there products and sells back cheap. China is going to drain everyone to become world's largest manufacturer and economic superpower.
    Definitely agree with this. Ideally, China would wake up and realize that they would be better off with fair trade policies. Foxconn will probably stay in China since it appears that tariffs (at the moment) aren't going to get raised.
    jbdragon
  • Reply 5 of 19
    wood1208 said:
    What a company got to do, it got to do. Strategically, USA/European tech companies are better off manufacture products somewhere else who don't steal IP,copy there products and sells back cheap. China is going to drain everyone to become world's largest manufacturer and economic superpower.
    So, what's wrong with that as long as the west can get less expensive things which end up in landfills a few short years later. 
  • Reply 6 of 19

    Since everyone is blocked from posting on "certain" articles I will post it here.  I find it very amusing that the very people that rely on "free speech" block that very thing on their own site.  What you are saying is our opinion does not matter.  Ban the trolls but don't ban discussion on sensitive issues.  It is "not the right thing to do".
    Free speech is only free when you pay for it. This website and the people behind it have cost and must earn a profit to keep it going. There is no law that says AI must provide a platform for anyone to voice their opinion and "free speech". For those that complain about their comments being blocked or removed I suggest starting your own blog or website. You are a guest who is allowed to leave your thoughts  the same way if you are invited to someone's home. Get rude and those host will ask you to leave and they are within their rights to do so. 
    edited December 4 mwhitemuthuk_vanalingamn2itivguyjony0
  • Reply 7 of 19
    So this is the front page of Apple’s website right now. I can’t rememner the last time they featured a price promotion at the very top of their front page.



    Also, 9to5Mac noticed Apple changed the marketing copy from a one line marketing slogan to a list of specific features:



    And Bloomberg is reporting a rumor that Apple’s marketing team was pulled off current projects to focus on iPhone sales:
    Company executives moved some marketing staff from other projects to work on bolstering sales of the latest handsets in October, about a month after the iPhone XS went on sale and in the days around the launch of the iPhone XR, according to a person familiar with the situation. This person described it as a “fire drill,” and a possible admission that the devices may have been selling below some expectations. The person asked not to be identified discussing private strategy changes.
    I don’t usually put much faith in supply chain rumors considering how often they’re wrong but something feels different this year that leads me to believe sales might not be what Apple execs were expecting. I mean if these devices were selling really well why would Apple be pushing trade-in deals (and even increasing the trade-in value by $100)? Why would they be OK with carriers like Sprint and TMobile offering the XR for free with signup? Those are not things you do for products that are selling well.
    muthuk_vanalingamcornchip
  • Reply 8 of 19
    lkrupplkrupp Posts: 6,526member
    Since everyone is blocked from posting on "certain" articles I will post it here.  I find it very amusing that the very people that rely on "free speech" block that very thing on their own site.  What you are saying is our opinion does not matter.  Ban the trolls but don't ban discussion on sensitive issues.  It is "not the right thing to do".
    Ever hear of Godwin’s Law? There is NO such thing as a “discussion” on sensitive issues on an anonymous blog. It’s just a series of putdowns, name calling, manifestos, spin, and alternative facts. 
    JWSCjony0
  • Reply 9 of 19
    jcs2305jcs2305 Posts: 547member
    Since everyone is blocked from posting on "certain" articles I will post it here.  I find it very amusing that the very people that rely on "free speech" block that very thing on their own site.  What you are saying is our opinion does not matter.  Ban the trolls but don't ban discussion on sensitive issues.  It is "not the right thing to do".
    If the conversation stayed on topic while discussing sensitive issues it could be informative and fun to participate in. Sadly that is not the case here from what I have seen anymore. Conversations turn political pretty quickly and the whole conversation becomes Trump supporters vs Liberals vs people with differing opinions on politics. With comments about the actual original topic sprinkled in.

    I wish people here as adults could police themselves and not use this as a way to bash or cheer lead for a particular political party or view,  We could all have entertaining conversations and maybe even learn something.

    One of the reasons I came here and stayed to post was because I respect the intelligence of some folks who post and enjoy the articles and reviews. I like that I have gained some knowledge here and shared some as well.
    n2itivguy
  • Reply 10 of 19
    Mike WuertheleMike Wuerthele Posts: 3,725administrator
    Since everyone is blocked from posting on "certain" articles I will post it here.  I find it very amusing that the very people that rely on "free speech" block that very thing on their own site.  What you are saying is our opinion does not matter.  Ban the trolls but don't ban discussion on sensitive issues.  It is "not the right thing to do".
    This is not your house, and you may set your own rules in there. The trolls are getting banned, but this is a business. When a thread is no longer cost effective to moderate, it gets closed. I've now said this in excess of 20 times. We have rules for a reason.

    Pro tip? We have the ability to post a news item with no comment thread at all. If there's a forum post with zero comments, and it's locked? We tried keeping it open, but forum-goer behavior forced it shut. I like you guys, but you collectively have no idea how to police yourselves when it comes to the political bicker-fests.

    Don't do this kind of derail again. Your relevant and respectful opinions matter -- yes, even dissent. Anything short of that does not. Do not construe my reply as an indication to continue the discussion on this topic, because there is not one to be had.
    edited December 4 beowulfschmidtn2itivguyjony0
  • Reply 11 of 19
    tzeshantzeshan Posts: 1,800member
    Even after moving to Vietnam this will not help the President's goal of reducing trade deficits. It is just shifting trade deficit to a different country. 
    muthuk_vanalingam
  • Reply 12 of 19
    MacPro said:
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    Seasteading is the new statelessness.

    https://www.seasteading.org/
  • Reply 13 of 19
    JWSCJWSC Posts: 252member
    MacPro said:
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    I like it!  It’s like pirate radio on the high seas.  So, if Apple had a floating factory in the middle of the ocean, does that mean there’s no government to tax them except when product is imported for sale?
  • Reply 14 of 19
    boltsfan17boltsfan17 Posts: 2,052member
    It makes sense Foxconn is considering Vietnam. Southeast Asia has become the new China. Apparel makers such as Adidas and Nike have realized this years ago so it's only a matter of time before tech companies start ditching China for Southeast Asia. 
  • Reply 15 of 19
    dewmedewme Posts: 1,803member
    MacPro said:
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    This sounds compelling until you realize the expense of operating and maintaining the nuclear power plants, or even the steam plants on the very few conventional hulls remaining in reserve. A closer fit would have been the small fleet of repair ships (destroyer and submarine tenders) that were already floating factories with massive heavy lift and power generation capability. Unfortunately most of these amazingly versatile and very long lived ships have been sunk as targets and the needs they served moved to shore based facilities. The decommissioned nuclear aircraft carriers are still laying around because there is no cost effective way to dispose of them safely. Most of the conventional ones have been cut up, sunk as targets, or cleaned up and sunk as artificial reefs.
  • Reply 16 of 19
    Mike WuertheleMike Wuerthele Posts: 3,725administrator
    dewme said:
    MacPro said:
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    This sounds compelling until you realize the expense of operating and maintaining the nuclear power plants, or even the steam plants on the very few conventional hulls remaining in reserve. A closer fit would have been the small fleet of repair ships (destroyer and submarine tenders) that were already floating factories with massive heavy lift and power generation capability. Unfortunately most of these amazingly versatile and very long lived ships have been sunk as targets and the needs they served moved to shore based facilities. The decommissioned nuclear aircraft carriers are still laying around because there is no cost effective way to dispose of them safely. Most of the conventional ones have been cut up, sunk as targets, or cleaned up and sunk as artificial reefs.
    The Enterprise was a radcon nightmare for almost a decade before decom.
  • Reply 17 of 19
    MacProMacPro Posts: 17,778member
    dewme said:
    MacPro said:
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    This sounds compelling until you realize the expense of operating and maintaining the nuclear power plants, or even the steam plants on the very few conventional hulls remaining in reserve. A closer fit would have been the small fleet of repair ships (destroyer and submarine tenders) that were already floating factories with massive heavy lift and power generation capability. Unfortunately most of these amazingly versatile and very long lived ships have been sunk as targets and the needs they served moved to shore based facilities. The decommissioned nuclear aircraft carriers are still laying around because there is no cost effective way to dispose of them safely. Most of the conventional ones have been cut up, sunk as targets, or cleaned up and sunk as artificial reefs.
    Actually, they have a miniature fusion reactor under wraps in what everyone thought was an electric car development facility. ;)
  • Reply 18 of 19
    MacProMacPro Posts: 17,778member
    MacPro said:
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    Seasteading is the new statelessness.

    https://www.seasteading.org/
    Sadly being French they'll have riots and strikes within weeks of opening.
    JWSC
  • Reply 19 of 19
    JWSCJWSC Posts: 252member
    MacPro said:
    MacPro said:
    Apple / Foxconn should look into buying some old aircraft carriers and turn them into floating fully automated factories.  They could them tow them wherever is most tax efficient. ;)
    Seasteading is the new statelessness.

    https://www.seasteading.org/
    Sadly being French they'll have riots and strikes within weeks of opening.
    Easy fix.  Rioters shall walk the plank!  🏴‍☠️ 
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