Google has reportedly become the latest company to aggressively move production out of China and in to Vietnam as it hopes to create a “low-cos supply chain in Southeast Asia” that “will serve as a springboard for its growing hardware ambitions,” according to Nikkei Asian Review.
Google, which is working with a partner to manufacture its smartphones, started work on converting an old Nokia factory in the North Vietnamese province of Bac Ninh where it will produce most of its Pixel phones, per two people familiar with the company’s plans. The area has a special significance in the history of smartphone development: It is the same province where Samsung built its first smartphone supply chain roughly ten years ago.
All of this history means Google will have access to an army of workers experienced.
The Vietnam production line is a critical component of Google’s strategy to boost growth in its Pixel smartphone brand. The company is planning to ship some 8 million units this year, roughly 2x the level from last year.
The Vietnam production lines will be a key part of Google’s drive for growth in the smartphone market. Google aims to ship some 8 million to 10 million smartphones this year, double from a year ago, sources told the Nikkei Asian Review. While Google’s Pixel smartphone brand is still a minor player in the industry – not even ranking in the global top 10, according to tech research firm Counterpoint – it is growing rapidly.
The mid-priced Pixel, launched in April, helped Google become the fifth largest mobile brand in the U.S. for the second quarter of 2019, grabbing market share despite a wider industry slump.
Google’s aggressive hardware campaign is expected to heap pressure on second-tier mobile makers such as LG Electronics and Sony, which are struggling as the industry faces its third consecutive year of decline.
Google shipped fewer than 5 million Pixel units last year, accounting for only 0.3% of the global smartphone market. Nearly all of its smartphone sales were recorded in the US.
The US tech giant refused to confirm or deny these reports, but Nikkei Asian Review has been at the forefront of reporting about tech companies and their plans to diversify production outside of China. As they’ve explained in the past, the trade war isn’t the only factor driving this trend: Rising wages on the mainland have also inspired companies to look to establish production in cheaper markets like Vietnam.