Vietnam Urges Apple Supplier Foxconn to Voluntarily Reduce Power Use by 30% amid Worsening Electricity Outages

By Madz Dizon

May 21, 2024 05:01 AM EDT

Vietnam Urges Apple Supplier Foxconn to Voluntarily Reduce Power Use by 30% amid Worsening Electricity Outages
A motorcyclist rides past a Foxconn logo in Taipei on January 31, 2019. - Taiwanese electronics giant Foxconn said on January 31 it was reassessing plans to build a cutting-edge factory in Wisconsin, an investment hailed by President Donald Trump as a flagship example of his push to revive America's manufacturing sector.
(Photo : SAM YEH/AFP via Getty Images)

Vietnamese authorities have requested that Foxconn, an Apple supplier, take proactive measures to decrease power consumption by 30% at its assembly plants in the northern region.

This is to avoid a recurrence of power shortages similar to those experienced last summer, which resulted in significant financial losses exceeding a billion dollars.

Foxconn Asked to Cut Power Use in Vietnam

According to Reuters, the request for energy-saving measures is being taken as a precautionary measure. It was also distributed to other manufacturers, with the goal of preventing a recurrence of the outages experienced last year.

As of now, production at Foxconn remains unaffected.

According to one source, the request made to Foxconn was seen as more of an encouragement rather than a requirement.

Furthermore, it has been stated that this request has not had any impact on production.

Vietnam is becoming more open to multinational companies, with some diversifying away from China as trade tensions with the U.S. escalate.

Last month, Apple announced plans for increased investment in a specific country, where it has recently expanded its network of suppliers.

The southeast Asian nation heavily depends on foreign investment to drive its economic growth and has been actively seeking to attract energy-intensive industries, like semiconductor manufacturing.

Last May and June, a heat wave led to a power shortage in the north, resulting in significant business interruptions. According to preliminary estimates from the World Bank, this caused a loss of $1.4 billion, which accounts for 0.3% of the gross domestic product.

In March, Prime Minister Pham Minh Chinh assured foreign investors that there would be no recurrence of power shortages. 

To address the high demand for electricity, the maintenance of coal-fired plants is being postponed.

Specific information regarding the request made to Foxconn, such as how long it will last, has not been disclosed.

Foxconn, also known as Hon Hai Precision Industry, has a number of manufacturing facilities in northern Vietnam, particularly in Bac Giang, where it is responsible for assembling Apple products.

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Vietnam Aims to Promote Energy Efficiency

Local power authorities have strongly encouraged industrial parks to adopt measures that promote energy efficiency.

Across the country, efforts are being made to promote energy conservation and address potential future shortages through the importation of coal, as per 9To5Mac.

Foreign chambers of commerce have emphasized the need for a stable power supply, as highlighted by South Korea's KoCham, which has observed setbacks in semiconductor investments caused by uncertainties in the supply chain.

According to reports, Apple is projected to shift a significant portion of its manufacturing operations to Vietnam by next year. This move will see around 20% of iPad and Apple Watch models, along with a whopping 65% of AirPods models, being produced in the country.

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