Apple chooses Vietnam for iPad, to move major engineering, manufacturing resources away from China

In a groundbreaking move, Apple has reportedly diverted its product development focus for the iPad to Vietnam, signalling a significant shift in the Southeast Asian nation’s role as an alternative manufacturing hub outside of China, according to a report by Nikkei Asia.

Nikkei reports sources familiar have said that Apple is collaborating with China’s BYD, a key iPad assembler, to relocate New Product Introduction (NPI) resources to Vietnam.

NPI involves the collaborative design and development of new products with suppliers to ensure the feasibility of blueprints. This marks the first time that Apple has transferred NPI resources to Vietnam for a core device.

The engineering verification process for test production of a new iPad model is set to commence around mid-February next year. The model is expected to hit the market in the second half of the following year. It’s worth noting that BYD was the initial Apple supplier to assist in relocating iPad assembly to Vietnam in 2022, as reported by Nikkei.

This particular shift of NPI engineering resources is concentrated on entry-level iPad models rather than the premium iPad Pro. NPI entails substantial resources from both the tech company and its suppliers, including engineers and investments in lab equipment for testing new features and functions.

While the majority of Apple’s NPI activities have historically taken place in China, recent geopolitical uncertainties have compelled the company to reconsider its approach. Additionally, Apple plans to extend some NPI processes for the iPhone to India, as previously reported by Nikkei Asia.

As the world’s leading tablet manufacturer, Apple currently commands a market share of 36.6% in the first three quarters of 2023, according to IDC data. Counterpoint Research estimates that approximately 10 per cent of all iPads were manufactured in Vietnam this year, with the majority still produced in China.

Vietnam has emerged as a crucial tech manufacturing hub for Apple, with the company urging suppliers to establish new capacity for nearly all its products, excluding the iPhone.

This move positions non-China hubs, including Vietnam, as genuine alternative manufacturing bases. Industry executives and experts assert that Vietnam consistently plays a crucial and strategic role in manufacturing, potentially evolving into one of the next global manufacturing centers.

Ivan Lam, a tech analyst at Counterpoint Research, emphasized Vietnam’s pivotal role, stating, “Apple’s recent supply chain mapping has demonstrated the capability of its production site in Vietnam to manufacture the iPad and scale up production.” Lam added that, given the maturation of production conditions and the reduced difficulty level of iPad manufacturing in Vietnam, it’s only a matter of time before this becomes a reality, with an initial focus on non-pro models.

Although several analysts acknowledge the emergence of India and Vietnam as pivotal manufacturing ecosystems, they also emphasise that despite US-China tensions, Apple will continue to collaborate closely with Chinese suppliers during its supply chain transition.

(With inputs from agencies)

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