Moving the supply chain out of China? The plans of giants such as apple and Google have been severely frustrated by the epidemic


Tencent technology news August 19th, as governments tighten border controls to curb the outbreak of COVID-19 variants, apple, Google, Amazon and major suppliers of these technology giants will disrupt their production supply chain transfer from China to Vietnam.
According to four people familiar with the matter, Google’s upcoming smartphone pixel 6 series will be produced in China, although the company planned to transfer mobile phone production to northern Vietnam early last year. Like last year’s pixel 5 series, due to limited engineering resources and intermittent travel restrictions in Vietnam, Google’s new mobile phones will be assembled in Shenzhen.
At the same time, two people familiar with the matter said that Apple would start mass producing the latest airpods headphones in China rather than in Vietnam as previously planned. However, the company still hopes to transfer about 20% of airpods production to Vietnam in the future. Airpods, including entry-level and high-end models, is one of the first products Apple began mass production in Vietnam.
People familiar with the matter also said that because of the lack of engineering resources, the incomplete supply chain of computer and the deterioration of COVID-19, Apple’s plans to bring parts of MacBook and iPad to Vietnam were also shelved.
Two people directly familiar with the matter said that Amazon’s facilities for producing smart doorbells, security cameras and smart speakers have recently moved to Vietnam, but they also face delayed production. Since May this year, the assembly line in the north of the country is responding to the surge of local infection cases and stricter epidemic prevention measures.
With a large number of young workers and proximity to China, Vietnam is in a favorable position to attract technology manufacturers. In the past few years, suppliers of apple, Google, Amazon, Microsoft and Dell have set up or expanded factories in Vietnam.
However, building a new regional supply chain requires experienced engineers and training of local workers. A supply chain executive serving apple and Google said that both China and Vietnam have adopted stricter border controls this year, which has slowed down the transfer of production between the two countries.
The executive said that the so-called “new product promotion” in Vietnam was particularly challenging due to the lack of engineers. New product promotion refers to the cooperation between the company and suppliers to develop and produce a new product.
He added: “Vietnam’s engineering talent is still far from enough. Due to travel restrictions, we can only produce products that can be produced on a large scale in Vietnam, rather than producing new products to be launched from scratch in Vietnam. ”
In order to control the outbreak of COVID-19, China has stepped up border control and slowed down the speed of issuing new passports and travel documents. Since the surge in infection cases in May, it has become more difficult for suppliers to send workers to Vietnam.
Several supply chain managers confirmed that it has become more difficult for their Chinese employees to apply for a business trip to Vietnam. Since earlier this year, there has been a need for “more documents and inquiries”. Many suppliers say they have tried to send engineers from other countries, but still face stricter access requirements.
“Border controls have been strengthened in the past few months,” said a senior Amazon executive. In order to support the Amazon production project in northern Vietnam, it is difficult to send Chinese technicians. ”
In response to the recent surge in infection cases, Vietnam’s major provinces have also ordered factories to stop production unless they can provide accommodation and commuting arrangements for workers. Samsung Electronics has temporarily suspended production in Ho Chi Minh City and laid off workers due to the spread of the epidemic.
In May, Apple’s main suppliers Foxconn, Li Xin precision, and GoerTek also temporarily stopped production in northern Vietnam to comply with more stringent COVID-19 control measures.
Annabelle Hsu, an analyst at IDC, a market research company, said: “we note that due to the recovery of the epidemic and the response measures taken by the government, the production line has been greatly affected and the transfer of production has slowed down. However, we believe that the Vietnamese government will not take such strict measures for a long time, otherwise it will affect its own economy and rising manufacturing strength. ”
The analyst also said that China still has the largest and most complex electronic supply chain in the world, and the Chinese government will do its best to prevent the loss of a large number of manufacturing jobs. Apple, Amazon and Google declined to comment´╝ł Tencent Technology (reviser / Jinlu)