Exclusive: Apple supplier BOE plans new factories in Vietnam

HANOI (Reuters) – Chinese display maker BOE Technology Group (000725.SZ), a supplier to Apple (AAPL.O) and Samsung Electronics (005930.KS), is planning a big investment, people familiar with the matter said. The company plans to build two factories in Vietnam, two people said.

According to one of them, the total investment could be up to $400 million.

The plan follows U.S. iPhone maker Apple and Taiwanese device assembler Foxconn amid trade and geopolitical tensions between Beijing and Washington, as well as production disruptions caused by China’s COVID-19 containment measures. It highlights efforts by the technology companies it leads to reduce the exposure of its supply chains to China.

BOE will lease dozens of hectares of land in northern Vietnam to supply mainly TV screens to South Korea’s Samsung Electronics (066570.KS) and LG Electronics (066570.KS), according to people familiar with the matter. It is said that negotiations are underway to add it to the factory. Negotiations were identified as confidential.

BOE declined to comment.

Northern Vietnam has attracted significant investment from electronics giants in recent years and has become a major production base for smartphones, computers and cameras, including flagship products from Apple and Samsung.

Foxconn (2317.TW) and China’s Luxshare Precision Industry (002475.SZ) will also manufacture or assemble a number of Apple products in this segment, including laptops and tablet computers.

BOE plans to lease up to 100 hectares and use 20% of it for a factory to manufacture remote control systems at a cost of $150 million, one of the people said.

The rest will be for displays, with BOE spending $250 million to build a factory on 50 hectares and suppliers will use all the remaining 30 hectares by 2025, the official said.

BOE plans to manufacture more sophisticated organic light-emitting diode (OLED) screens on site rather than liquid crystal displays (LCDs), the people said.

Apple, which has included BOE on its manufacturing partner list for 2021, uses OLED screens in its latest iPhone smartphones.

China, the country’s largest display maker, will become the largest supplier of displays for new iPhones by 2024, analyst Kuo Ming-chi released a forecast from TF International Securities last week.

However, the US tech giant plans to start manufacturing mobile screens in-house by next year, Bloomberg reported Wednesday.

Apple declined to comment.

BOE’s Vietnam plan is not specifically aimed at supplying Apple, the people said.

Customers Samsung, the world’s largest smartphone maker, produces half of its mobile phones in Vietnam, while LG has large operations in Vietnam and is planning new investments.

Reporting by Francesco Guarascio. Additional reporting by Josh Horwitz and Phuong Nguyen.Edited by Christopher Cushing

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