Apple Partner Pegatron to Set Up Production in Vietnam

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Taiwan’s Pegatron Corp. plans to set up production facilities in Vietnam, according to people familiar with the matter, becoming the latest Apple Inc. assembly partner to establish a presence in the Southeast Asian nation as they diversify beyond China.

Taipei-listed Pegatron is looking for a site to build a brand new facility in the north of the country, according to people familiar with the matter who asked not to be identified discussing private plans. It already has rented a separate facility in the northern city of Haiphong, they said. Pegatron will make styluses for Samsung Electronics Co.’s smartphones there, one of the people said. The gadget manufacturer’s share price remained largely unchanged in Tuesday trading.

Pegatron joins Apple’s two other iPhone assemblers -- Wistron Corp. and Hon Hai Precision Industry Co. -- in developing manufacturing facilities or building extra capacity in Vietnam. None of the three are making iPhones in Vietnam and have no imminent plans to do so. The only Apple device Pegatron makes is iPhones. GoerTek Inc. is now making AirPods in the country, while two other Apple assembly partners, Compal Electronics Inc. and Luxshare Precision Industry Co., also have a presence in Vietnam.

An almost two-year-long trade war with the U.S. has put China’s position as factory for the world of technology in jeopardy, undermining a decades-old global supply chain and pushing electronics companies to look for alternative production bases. Though Washington and Beijing have signed a phase-one trade deal, supply-chain diversification is still essential in the longer term given tensions are unlikely to fully subside and labor costs are rising in China.

Taiwanese companies have been particularly active in their search for options, with companies from Inventec Corp. to Foxconn Technology Group either moving production back home or to more distant regions around Asia, seeking to escape U.S. tariffs.

Vietnam has been a top beneficiary from tariff-related trade diversions. Indonesia has also gained, including garnering investment from Pegatron.

“Vietnam’s enhanced vocational training has helped boost the quality of its pool of workers to close to China’s level and its government has been keen to clear hurdles including bureaucracy for foreign companies to invest in the country,” said Roy Lee, a researcher at Taipei-based Chung-Hua Institution for Economic Research.

(Updates with share details in second paragraph)

To contact the reporter on this story: Debby Wu in Taipei at dwu278@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Colum Murphy, Vlad Savov

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