Foxconn considers building servers in Vietnam: industry report
Global technology manufacturer Foxconn, which is set to make Apple MacBooks in Vietnam for the first time from May 2023, is also studying the feasibility of producing servers in the Southeast Asian country, according to Digitimes Research.
The study is part of a partial migration of server manufacturing from China to Southeast Asia, Taiwan, and North America, said a research report from Digitimes, a Taiwan-based newspaper for semiconductors, electronics, computers, and communications.

Logo of Foxconn, a world's top electronics production contractor. Photo courtesy of the firm.
Authorities in Bac Giang province near Hanoi are scheduled to hand out an investment license to Foxconn on January 2, 2023 for the Taiwanese giant to invest an additional $600 million to build a new plant in Quang Chau Industrial Park to make MacBooks.
Foxconn is expected to invest further into the project after the first phase, said Nguyen Thi Thu Huong, CEO of Kinh Bac City Development Holding Corp, which owns and operates Quang Chau IP. She did not mention what Foxconn plans to produce in the second phase.
In their latest report, the Digitimes Research team said the U.S.-China trade war, decarbonization, and geopolitical factors have been the driving forces behind this migration of server production to Southeast Asia, Taiwan, and North America.
“The growing presence of Southeast Asia and North America in the server manufacturing sector is especially significant,” said the report. Nearly 60% of the world's servers have been produced in China in 2022, but the percentage has actually decreased from 70-80% before the trade war.
"Taiwanese server manufacturers Inventec and Quanta moved part of their server supply chains back to Taiwan in 2019 in the heat of the trade war, and the trend of diversifying capacities out of China continues," said Digitimes Research analyst Frank Kung.
He estimated that China's share of global server output may drop to as low as 35% by 2024, and Southeast Asia and North America will see their server production grow by 2024.
Server manufacturers Quanta Computer and Wiwynn have decided to move some of their production lines to Thailand and Malaysia, respectively, said Kung.
Mitac Holdings has also announced that it will expand its production capacity in Southeast Asia without specifying the country where its factory will be located, he added.
"Localization and regionalization will be a global trend of no return," Kung said, noting that the demand for low latency in data transmission, and protection of sensitive data as required by regulators are important factors for server manufacturers.
The trend of hybrid cloud, which requires the combination of cloud and the edge, cannot do without the deployment of the edge, and that requires servers close to the users. The other key factor is the decarbonization requirements of the clients, including the cloud service providers and the brand-name original equipment manufacturers (OEM), who all want to keep their carbon footprints as low as possible.
At present, Quanta Computer is mulling over making MacBooks in Vietnam. It is likely Quanta will build a plant in northern Vietnam.
The Digitimes server supply chain report is similar to a mid-December research report by TrendForce, an international market intelligence provider.
TrendForce said that in the global server supply chain realignment, Southeast Asian countries have also come under consideration for capacity expansion.
The firm said it believes the core parts of the server supply chain will eventually shift to Southeast Asia and the Americas.
Wistron (which encompasses Wiwynn) plans to set up a production base in Malaysia at the beginning of 2023 to offer reserved production capacity that can be deployed immediately. Other major ODMs like Foxconn and Quanta have added new production capacity in Vietnam, Thailand, the U.S., and Mexico so that they can maintain production flexibility, said TrendForce.
It especially pointed out that the relocation efforts taking place across the server supply chain are expected to bring about a lot more changes in the future.
On the demand side, major North American corporations like Google, AWS, Meta, and Microsoft have moved most of their ODM partners’ level-6 server production lines to Taiwan and made plans to set up production capacity in Southeast Asia to further minimize geopolitical risks.
In conclusion, TrendForce believed China and Taiwan’s shares of level-6 server production lines will shrink over the long term.
In global server manufacturing, there are 11 levels. Among them, levels 1 to 6 are performed by ODMs; levels 6 to 10 by OEMs; while levels 10 to 11 are for service providers to activate their services.
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