Terry Gou, founder of Foxconn.

Simon Song/South China Morning Post via Getty Images

Taiwan’s Foxconn Technology, which manufactures electronics for Apple, this week received a license from the Vietnamese government to build a $270 million plant to make laptops and tablets in the Southeast Asian nation amid U.S.-China tensions.

The new plant, which will be developed by Foxconn subsidiary Fukang Technology, will be located in the rural province of Bac Giang, just outside Hanoi, and will be able to manufacture eight million units annually, according to the Vietnamese government’s website.

Foxconn, which was founded by Taiwanese billionaire Terry Gou, has been operating in Vietnam since 2007 and invested a total of $1.5 billion. The contract electronics manufacturer plans to invest another $700 million and hire 10,000 more local workers in Vietnam this year, the government said.

Foxconn does most of its assembly of iPads and MacBooks for Apple in China, where it operates 12 factories across nine cities, but is moving some of its work to Vietnam at the request of the U.S. tech giant, reported Reuters. The U.S.-China trade tensions prompted companies to diversify manufacturing away from China, where the U.S. has imposed tariffs, to other countries, including neighboring Vietnam. Foxconn ships finished electronics from its China factories to the U.S., Apple’s largest market.

“The trade war really caught them out because they were so dependent on China,” says Rajiv Biswas, executive director and Asia-Pacific chief economist at research firm IHS Markit.

Manufacturing has been growing steadily in Vietnam since 2012 due to its low labor costs and proximity to raw materials in China, as well as government support for foreign investment. Foxconn is looking to Vietnam largely to save on labor costs, which is lower than China’s, says Biswas. Less reliance on China would buffer Foxconn against any repeat of last year’s disruption, when factories in China were closed to contain the spread of the coronavirus, he adds.

Foxconn is separately seeking approval to build a $1.3 billion industrial park in Thanh Hoa in northern Vietnam for more factories, reported Nhip Cau Dau Tu Magazine.

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Roland Millaner