COVID prevents Apple and Google from moving out of China

The recent COVID-19 leaks threaten Apple, Google, Amazon, and their suppliers’ plans to move production from China to Vietnam as governments tighten border controls to deal with rising protein pressures. According to four sources familiar with the situation, Google’s next Pixel 6 line will be manufactured in China, despite the company’s earlier plans to shift production to northern Vietnam.

Like the Pixel 5 range last year, new phones will be assembled in Shenzhen due to limited technology sources in Vietnam and arbitrary travel restrictions, people said. Apple, meanwhile, will begin rolling out its new AirPods headphones in China instead of Vietnam as previously planned, two people familiar with the situation said. The company also hopes to move around 20% of the production of new AirPods to Vietnam later, they said.

AirPods – both entry-level and high-end models – are among the first products Apple began making in major brands in Vietnam, launching production two years ago during the height of the US-China trade unrest. Apple’s plan to bring some of the MacBook and iPad production to Vietnam has also been delayed due to lack of device resources, incomplete computer supply chain and powerful COVID status, one of the people said.

The construction of sliding doors, security cameras and smart speakers for Amazon, which recently moved to Vietnam, has also faced delays since May as assembly lines in the northern part of the country faced a surgery. in local cases and strong COVID prevention measures, two people. with direct knowledge of the said words.

Thanks to its youthful potential and proximity to China, Vietnam has moved well to attract technology manufacturers when Washington began imposing sanctions on Chinese products in 2018. Manufacturers of Apple, Google, Amazon, Microsoft and Dell has set up or expanded factories nationwide in the last few years.

Setting up a local supply chain, however, also requires experienced and trained engineers for local staff. Both China and Vietnam have agreed to strict border controls this year, which has slowed manufacturing turnover between the two countries, a supply chain executive who works for Apple and Google told Nikkei Asia.

The executive said it was particularly challenging to implement so-called new product launches – in which companies and suppliers work together to develop and launch a completely new product – in Vietnam due to a lack of engineers.

“[Vietnam’s] The capacity of the technical staff is still far from normal, ”the man said. “With all the travel restrictions, it is only possible to produce products in Vietnam that are already in mass production, instead of starting production of products coming from scratch in that country. ”

China’s National Disaster Management Authority earlier this month confirmed that it has tightened border controls and slowed the issuance of new passports and travel documents to contain outbreaks of delta discrimination.

“The administration has strictly reviewed all our public passports and travel documents to prevent the pandemic from spreading through border movements,” the questionnaire and public response published by the administration said. August 4, 4. “The administration will continue to adopt strict policies that continue to curb unnecessary border travel.” Sending staff to Vietnam has also been difficult since the outbreak of the deadly virus in May, according to sources.

Many supply chain managers told the Nikkei Asia that it had been difficult for their Kannada workers to apply for business trips to Vietnam, with “more documents and requirements” needed in China since the beginning of this year. Many of the suppliers said they had tried to send engineers from other countries, although they also faced strict entry requirements on both sides. “Border control has been restricted in recent months. We cannot easily send our Kannada engineers to support our manufacturing operations for Amazon in northern Vietnam, so the company is fully importing Taiwanese technicians from China, ”said the director. adult said an Amazon manufacturer.

To combat the recent surgery in infectious diseases, major Vietnamese communities also ordered factories to stop production unless they could provide sleeping or travel arrangements for workers. Samsung Electronics has temporarily suspended production in Ho Chi Minh City and its workload has returned due to increased COVID status. Apple Key suppliers Foxconn, Luxshare and Goertek in May also temporarily suspended production in northern Vietnam to comply with strict COVID control standards.

Annabelle Hsu, a consultant with the research firm IDC, told Nikkei Asia that any setback for Vietnam, which has already emerged as a key alternative to China, is likely to be temporary. “We note that some of our effects on production lines and reduction in energy conversion are due to COVID-19 renewal and government measures. “However, we do not think the Vietnamese government will take such drastic measures in the long run, otherwise it will affect its own system and rapid production capacity,” Hsu said.

China also boasts a supply chain of the largest and most sophisticated electronics in the world, and the Chinese government will do everything in its power to prevent a large number of manufacturing projects from leaving the country. , Hsu incorporates. “It is a long-term conflict between China and non-China manufacturing, and at the end of the day, the pace of manufacturing will depend on geopolitical pressure from major economies such as the US or India to accelerate. e. ”

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