Vietnamese authorities have urged Foxconn, Apple’s major supplier, to voluntarily reduce energy consumption by 30% at its assembly plants in the northern part of the country due to ongoing electricity shortages. This request aims to prevent a repeat of last year’s power outages, which resulted in over $1 billion in production losses, according to a Reuters report.
Voluntary Reduction to Prevent Production Losses
Officials have asked Foxconn to cut its energy use as a precautionary measure to avoid disruptions similar to those experienced last year. A source mentioned that the request is more of a recommendation than a mandate and is not expected to impact production. The increasing trade tensions between the U.S. and China have made Vietnam an attractive location for multinational companies. The Southeast Asian nation relies heavily on foreign investment for economic growth and aims to attract energy-intensive industries like semiconductor manufacturing.
Last Year’s Outages and Their Impact
The power outages in May and June last year, triggered by a severe heatwave, led to a $1.4 billion loss in production in northern Vietnam. In March, Prime Minister Pham Minh Chinh assured foreign investors that such outages would not recur. The government has asked coal-fired power plants to postpone maintenance during the hottest months to meet the rising electricity demand. Additionally, Vietnam is increasing coal imports and encouraging energy conservation among its citizens.
Foxconn’s Operations in Vietnam
Foxconn, the world’s largest contract electronics manufacturer, produces goods for several major companies. The company operates six facilities in northern Vietnam, including those in Bac Giang province, where MacBooks and iPads are assembled. The South Korean business association KoCham has indicated that semiconductor companies are delaying investment decisions in Vietnam due to concerns over the stability of energy supply.
Vietnam’s measures to ensure a stable power supply during peak demand periods are crucial for maintaining the confidence of foreign investors and sustaining economic growth. However, the persistent energy challenges highlight the need for more robust and reliable energy infrastructure to support the country’s industrial ambitions.
