Apple in Talks with Suppliers to make MacBooks in Thailand

U.S. tech giant turning out Apple Watch in Southeast Asian country

Apple is in talks with suppliers to make MacBooks in Thailand as the company continues to expand its manufacturing footprint outside of China amid geopolitical uncertainties.

The company has also been mass producing its Apple Watch in Thailand for more than a year, further underscoring the growing importance of the country, and Southeast Asia more broadly, as an alternative production base to China.

The Apple suppliers involved in the talks already have manufacturing complexes in Thailand for other clients and are discussing possible assembly and production of components and modules for MacBooks, according to sources from three suppliers directly involved in the conversations with Apple.

"Ideally, Apple asked us to set up facilities in Vietnam for MacBooks, following in the footsteps of other Apple suppliers, but we offered an alternative option of building the product at our Thailand plants, which still have a massive space that can be reserved for the client," a senior executive at one of the suppliers said. "As MacBook assembly will begin in Vietnam first, we could support the components from our Thailand plants, too. ... It will only take two to three days of logistics and custom clearance."

An executive at another supplier said his company is building new plants in Thailand for Apple, and construction of a new factory for MacBooks and other products will be completed this year. An executive at the third supplier said the company has set up a trial production line for MacBooks in Thailand, but the company is also looking for a plot of land in Vietnam as a backup plan.

The U.S. tech giant plans to begin mass producing MacBooks in Vietnam in the first half of this year, Nikkei Asia earlier reported, the first time the flagship product will be made outside China.

Shifting production away from China is difficult for Apple and its suppliers, given they have spent decades building a massive supply chain in the country. In his first trip to China in three years, Apple CEO Tim Cook last month lauded his company's "symbiotic kind of relationship" with the country.

But the geopolitical tensions that have forced the iPhone maker to rethink its supply chain show few signs of easing. A bipartisan group of U.S. lawmakers on the House Select Committee on the Chinese Communist Party last week met tech executives, including Cook and Disney CEO Bob Iger, to discuss China.

Apple has gradually moved some production capacity for AirPods, the Apple Watch, iPads and MacBooks to northern Vietnam in recent years. The number of Apple suppliers in the country increased to 25 in 2021 from 14 in 2018, when the trade war started escalating, according to Nikkei Asia's analysis of the company's official list of suppliers.

This growth has made the Southeast Asian country a key beneficiary of the trend toward supply chain diversification. However, many suppliers have encountered labor shortages, particularly of skilled technicians and engineers, due to the sharp increase in demand for such workers, several industry sources said.

"We already asked the human resources agency to hire production line workers from Cambodia and Laos for our plants in Bac Ninh province," said an executive whose company supplies Apple in Vietnam. "The labor costs also increased so fast. ... In just a few years, the basic wage we offer in Vietnam is already 80% of the offer in our Shenzhen facility."

Thailand is also an emerging beneficiary of the U.S.-China trade war, with many server, data center, printer and automotive suppliers setting up factories in the country since 2018.

Three other sources said that Apple has been making the Apple Watch in Thailand for more than a year. "What we understand is Apple wants to build an economic scale of production capacity outside of China. ... We've been helping the company to make the product for some time now," said a senior source with direct knowledge of the production.

Eddie Han, a senior analyst with Isaiah Research, said that the labor, land and costs issues in northern Vietnam have been going on for a while, and that some suppliers have started looking for land in central Vietnam.

"We know some suppliers are discussing building MacBook production lines in Thailand with Apple, but it seems Apple is not too enthusiastic about the idea at the moment," Han said, citing his supply chain checks. "Vietnam is still geographically closer to China, and it has more free trade agreements than Thailand has," he added.