Apple is reportedly directing its development resources for the iPad to Vietnam for the first time, according to sources familiar with the matter. This move signifies a significant step toward bolstering Vietnam’s position as an alternative manufacturing center outside of China.
Collaborating with China’s BYD, a major iPad assembler, Apple intends to transfer new product introduction (NPI) resources to Vietnam. NPI involves tech companies like Apple working closely with suppliers to ensure the feasibility of new product designs and developments. This marks the initial instance of Apple shifting NPI resources to Vietnam for a core device like the iPad.
Sources informed Nikkei Asia that the engineering validation for test production of an iPad model is set to commence around mid-February next year, with the model slated for release in the latter half of the year.
BYD was the pioneer Apple supplier aiding the tech giant in relocating iPad assembly to Vietnam in 2022, as reported by Nikkei. However, this specific transfer of NPI engineering resources focuses on entry-level models rather than the premium iPad Pro.
NPI demands significant resources from both the tech company and its suppliers, necessitating engineers and investment in laboratory equipment to test new features and functionalities.
Traditionally, much of Apple’s NPI activities have been conducted in China in partnership with engineers in Cupertino, leveraging the country’s extensive experience in hardware manufacturing. However, geopolitical uncertainties are prompting the company to reconsider this approach. Earlier reports from Nikkei Asia indicated Apple’s plans to also shift some NPI processes for the iPhone to India.
According to IDC data, Apple holds the top spot as the world’s largest tablet maker with a market share of 36.6% in the first three quarters of 2023. Nevertheless, only about 10% of all iPads were manufactured in Vietnam this year, with the majority still produced in China, as per Counterpoint Research.
Vietnam has emerged as a crucial tech manufacturing hub for Apple outside of China. The company has instructed its suppliers to establish new manufacturing capabilities for nearly all its products, except the iPhone, in the Southeast Asian country. The existence of NPI resources outside of China implies that non-China hubs could become a genuine alternative manufacturing base, according to industry insiders and experts.
Ivan Lam, a tech analyst at Counterpoint Research, highlighted Vietnam’s strategic importance in manufacturing, emphasizing its potential as a significant global manufacturing center. Lam noted that Apple’s recent supply chain assessment demonstrates Vietnam’s manufacturing capability for the iPad and its potential to expand production.
Echoing similar sentiments, Bryan Ma, vice president of client devices research at IDC, highlighted Vietnam’s position as a beneficiary of the device industry’s efforts to diversify manufacturing, including not just tablets but also more complex products like personal computers. Ma emphasized the importance of the entire ecosystem moving with assemblers, particularly in the case of notebooks with multiple discrete parts.
Vincent Chen, president of CTBC Securities Investment Service and a seasoned tech analyst, emphasized the emergence of India and Vietnam as crucial manufacturing ecosystems. However, he also noted that despite U.S.-China tensions, Apple will likely continue to collaborate closely with Chinese suppliers during its supply chain shift.
