Apple’s partners Foxconn Technology Group and Pegatron are seeking to expand their production into Southeast Asia in 2023 to mitigate geopolitical and economic risks. The reason for this is the increasing tension between China and Taiwan.Both Foxconn and Pegatron are electronics manufacturing companies headquartered in Taiwan. The two companies manufacture for Apple and other partners, both in China and Taiwan.
Apple’s manufacturing partners move away from China
In this context, Foxconn chairman Liu Yang stated at a company event that their expansion plans towards Southeast Asia will begin to bear the first fruits by 2023. However, there is no specific statement on which countries they will focus on.
Pegatron, Foxconn’s smaller competitor, plans to spend $300 to $350 million this year in capital, partly to expand its manufacturing capacity in Southeast Asia and auto parts production in Mexico. Pegatron is also a supplier to Tesla. However, both companies currently manufacture iPhones in China and India. On the other hand, Apple also uses Vietnam as an alternative production base. Pegatron has factories in Vietnam and Indonesia, but currently no production for Apple at these facilities.
The China trade war, which started with the former US President Trump, continues today. While the US imposes high-tech restrictions on China, it also imposes high tariffs on imports. On the other hand, China continues its coronavirus-related quarantines. These quarantines result in factories in China stopping production from time to time. In light of all this, it seems imperative to diversify supply chains.In this context, we will see Foxconn and Pegatron’s targets to expand into Southeast Asia in 2023 accelerate. Of course, these are not the only companies that want to move their production away from China and regional risks. In 2023, we may see the escape from China and Taiwan accelerate.
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