Apple is gearing up to carry out a trial production of AirPods in Vietnam. This is as part of Apple’s aim to expand manufacturing outside of China.
Earlier this summer, Apple asked its suppliers to explore manufacturing in other markets. This was at a time when concerns about possible China tariffs were at their height.
For the AirPods trial, Apple has recruited one of its key contract manufacturers GoerTek. According to a new report, it will carry out the trial manufacturing process at its audio factory in northern Vietnam.
Apple has long produced its wired EarPods in Vietnam. However, this would mark the first time that AirPods have been made outside China. They are Apple’s fastest growing product, shopping 35 million units last year. By comparison, in 2017 they shipped “only” around 20 million.
Apple has supposedly written to component suppliers, asking them to give favorable component pricing to Goertek, despite the fact that it is ordering small quantities. That’s because this is a feasibility study to see whether mass manufacturing in the region could work.
The “China plus one” strategy
“It’s very likely that Apple will adopt the ‘China plus one’ strategy when it comes to diversification efforts,” Chiu Shih-fang, a supply chain analyst at Taiwan Institute of Economic Research, told Nikkei Asia Review. This means that Apple is likely to start manufacturing in countries outside China, but without reducing Chinese volume initially.
Vietnam is emerging as a promising alternative to China. Other Apple suppliers such as Foxconn are considering opening facilities there in the near future.
But while it has a highly skilled workforce, there are still challenges. Vietnam has just 1/15th of China’s population. There are signs of potential shortages of labor there. The country has also been threatened with possible tariffs by President Donald Trump.