Apple partner Pegatron to set up production facility in Vietnam

Taiwan-based Pegatron Corporation plans to set up production facilities in Vietnam, becoming Apple’s latest assembly partner to establish a presence in the country in a bid to diversify beyond China, Bloomberg reported.

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Taipei-listed Pegatron is looking for a site to build a brand new facility in the north of Vietnam, according to people familiar with the matter. It already has rented a separate facility in the northern city of Haiphong, they said. Pegatron will make styluses for Samsung Electronics’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.

The ongoing trade war between the US and China is a factor behind this move. 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 US tariffs.

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