Key Apple Partners Plan To Expand In Southeast Asia In 2023

Southeast Asia was a part of Foxconn Technology Group and Pegatron Corp.'s expansion plans for 2023, which is a sign that big international contract electronics manufacturers will keep expanding their production capacity outside of China to reduce geopolitical and economic risks.

“We will continue to grow our scale in mainland China, the Americas, and Southeast Asia, and these efforts will blossom in 2023," said Young Liu at a business event on Sunday. Young Liu is the chairman of Foxconn's flagship company, Hon Hai Precision Industry Co.

Separately, Pegatron, a smaller competitor to Foxconn, will spend $300 million to $350 million on capital projects this year, with some of the funds going toward expanding capacity in Southeast Asia and ramping up manufacturing of automotive components in Mexico, company executives told reporters in Taipei on Sunday. Another supplier to Tesla Inc. is Pegatron.

“Diversification of supply chain is an ongoing trend," Johnson Teng, co-chief executive officer of Pegatron, remarked.

Along with making iPhones in China, Foxconn and Pegatron are currently producing some of Apple's well-known phones in India. As an alternative production base for other items, such as AirPods, Apple is now looking to Vietnam.

According to Vice Chairman Jason Cheng, Pegatron would increase capacity in Vietnam and Indonesia, where they currently have operations. Neither nation currently produces Apple products due to the firm. Which Southeast Asian nations Foxconn intends to develop in is unclear.

During the Trump presidency, major contract electronics manufacturers began to significantly expand their manufacturing footprint outside of China as a result of the US president's trade war with China, which included the imposition of high tariffs on select Chinese imports. In the midst of protracted Covid-caused lockdowns in China that have clogged supply chains, several suppliers have accelerated such diversification efforts.

Foxconn and Pegatron both experienced interruptions in China because of Covid. Production at Pegatron had to be temporarily stopped, and Foxconn's main plant in the city of Zhengzhou was attacked by a violent protest, which hampered the iPhone manufacturer's operations and compelled Apple to warn that shipments would be lower than expected.