Apple supplier Goertek said on Monday it would invest up to US$280mil to establish a wholly-owned subsidiary in Vietnam to meet demands for “business expansion and long-term operation” in the South-East Asian nation, according to a corporate filing.

Goertek’s Vietnamese entity, which will manufacture consumer electronics products from AirPods and smartwatches to virtual reality and augmented reality gear, is a project that will meet both the Chinese assembler’s future development plan and client demand, it said in the filing to the Shenzhen Stock Exchange.

“(The project) is advantageous to make better use of local resources in Vietnam to enhance the company’s overall competitiveness,” Goertek said.

Goertek has been tapped by Apple to become one of the major mainland suppliers of its mixed reality Vision Pro headset, which is set to launch in early February.

The Vietnamese subsidiary, which will be set up through its Hong Kong entity Goertek (Hong Kong) Co, is expected to be located in the Bac Ninh province, which has attracted investment from a raft of South Korean firms including consumer electronics and semiconductor giant Samsung Electronics.

South Korean firms have emerged as major investors in the Vietnamese province, setting up factories for electronics, smartphone, semiconductor and precision mechanical manufacturing, according to the Vietnam Chamber of Commerce and Industry.

Goertek’s latest move comes as Apple is starting to shift more of its production outside China, a move that came after Beijing’s stringent Covid-19 restrictions during the pandemic disrupted Apple’s supply chain, impacting its global sales in the lead up to the Christmas shopping season in 2022.

Since then, Apple has encouraged its manufacturing partners to diversify into other countries, including Vietnam, to reduce its reliance on China.

Apple suppliers, including Taiwanese contract manufacturer Foxconn, have invested up to US$16bil to reduce their dependence on China, by relocating facilities to India, Vietnam, Mexico as well as the US, according to a report by AppleInsider, citing research by investment bank TD Cowen.

Late last year, Foxconn, the biggest maker of iPhones, announced a plan to invest US$1.6bil in India to expand its presence in the South Asian nation.

 - SCMP