Your next iPhone might come from Vietnam as manufacturers seek to avoid trade war fallout

Why it matters: While Trump has his eyes set mostly on China, It looks like the sparring has provided an excellent window of opportunity for small countries like Vietnam to emerge as new technological centers in Asia. India may have looked like the obvious winner until today, but the way it is governed might be working against that goal, which happens to be a boon for smaller countries to the East.

It’s no secret that big tech is scrambling to move production out of China: PC makers like Microsoft, Dell, Lenovo and HP, console manufacturers like Nintendo and Sony, Amazon with Kindle and Echo, Google, Samsung and Apple with their tablets and phones. Some of them have even went to publicly denounce Trump’s tariffs on $300 billion worth of consumer electronics that they’re making in China.

For a while India looked it would take over a large piece of that pie, with Apple contracting Foxconn, Pegatron and Wistron to make lower end iPhones and Samsung opening the world’s largest phone manufacturing facility in the country.

Big tech has also set its eyes on other countries like Indonesia, Thailand, and most importantly, Vietnam. The NY Times says manufacturers in the country are in talks with tech giants and looking to scale up their capacity.

Your next iPhone might come from Vietnam as manufacturers seek to avoid trade war fallout 1

The challenges mostly revolve around the bill of materials, many of which are imported from China. A notable example is plastic, which is 5 to 10 percent more expensive in Vietnam because until now there hasn’t been an incentive for local suppliers to make more of it.

United States and China will have another round of negotiations in Shanghai this week, but many expect the trade war to have lasting effects that will see manufacturers gradually move their operations out of the country. Couple that with the fact that Vietnam is working hard on developing its infrastructure and signing trade deals with the E.U., and you can see why big tech would be interested in moving there.

There are more reasons to think your next iPhone might be assembled in Vietnam, but perhaps the most telling is that Foxconn has already acquired a piece of land in the country to set up shop. Apple is not likely to move all production anytime soon, but this a signal that we may have reached peak China.

Rival Samsung is apparently putting together half of its phones and accessories sold worldwide in Vietnam using 100,000 people. Those accounted for over $70 billion in sales, and convinced several of its South Korean suppliers to set up their own presence there as well.

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