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Apple's partner Pegatron sets up facility in Vietnam

Taipei

TAIPEI'S Pegatron Corporation plans to set up production facilities in Vietnam, becoming the latest Apple assembly partner to establish a presence in the South-east Asian nation as it diversifies beyond China.

Taipei-listed Pegatron is looking for a site to build a brand-new facility in the north of the country, according to people familiar with the matter; they asked not to be identified because the talks are private.

The company has already has rented a separate facility in the northern city of Haiphong, they said. Pegatron will make styluses for Samsung's smartphones there, one said.

The gadget manufacturer's share price remained largely unchanged in Tuesday trading.

Pegatron joins Apple's two other iPhone assemblers - Wistron and Hon Hai Precision - in developing manufacturing facilities or building extra capacity in Vietnam. None of the three are making iPhones in Vietnam and have no imminent plans to do so. The only Apple device Pegatron makes is iPhones.

China's GoerTek is now making AirPods in the country; two other Apple assembly partners, Compal Electronics and Luxshare Precision, also have a presence in Vietnam.

An almost two-year-long trade war with the US has put China's position as factory for the world of technology in jeopardy, undermining a decades-old global supply chain and pushing electronics companies to look for alternative production bases.

Though Washington and Beijing have signed a Phase One trade deal, supply-chain diversification is still essential in the longer term, given tensions are unlikely to fully subside and labour costs are rising in China.

Taiwanese companies have been particularly active in their search for options, with companies from Inventec to Foxconn Technology Group either moving production back home or to more distant regions in Asia, seeking to escape US tariffs.

Vietnam has been a top beneficiary from tariff-related trade diversions. Indonesia has also gained, including garnering investment from Pegatron.

Roy Lee, a researcher at Taipei-based Chung-Hua Institution for Economic Research, said: "Vietnam's enhanced vocational training has helped boost the quality of its pool of workers to close to China's level, and its government has been keen to clear hurdles, including bureaucracy for foreign companies to invest in the country." BLOOMBERG