By Francesco Guarascio and Ben Blanchard
HANOI/TAIPEI (Reuters) – Vietnamese officials have called on Apple (NASDAQ:) supplier Foxconn to voluntarily reduce power consumption by 30% at its assembly plants in the north of the country where electricity went out last year, two people familiar with the matter said.
The request for energy-saving measures, which was sent to multiple manufacturers according to two other industry sources, is precautionary and intended to prevent a repeat of last summer, when the power shortage led to more than a billion dollars in production losses.
The request to Foxconn was “an encouragement,” not a requirement, and has had no impact on production, one of the people said.
Vietnam is increasingly welcoming multinational companies, some of which are spreading their risks from traditional manufacturing base China, amid rising trade tensions with the US. Last month, Apple pledged further spending in the country where it has increased its number of suppliers from 25 to 35 over the past year.
The Southeast Asian country relies on foreign investment for economic growth and is trying to attract energy-intensive industries such as semiconductor manufacturing.
However, a heat wave last May and June caused a power shortage that interrupted trade in the north, causing a loss of $1.4 billion, or 0.3% of gross domestic product, preliminary World Bank estimates showed.
In March, Prime Minister Pham Minh Chinh promised foreign investors that a power shortage would not occur again.
The government has asked coal-fired power stations to delay maintenance to meet higher electricity demand in the hottest months, one of the people said.
The people did not specify who sent the requests, when the request was sent to Foxconn or for how long the voluntary reduction in electricity use would be necessary. One person said the request was open-ended.
All sources asked to remain anonymous because the matter was not public. Apple did not respond to a request for comment.
COORDINATION
Foxconn, formerly Hon Hai Precision Industry, is the world’s largest manufacturer of contract electronics. It has about half a dozen factories in northern Vietnam, including in Bac Giang province, where local authorities say it assembles Apple MacBooks and iPads.
The state’s provincial power distributor Bac Giang Power Company (BG PC) said in March it had asked industrial parks and authorities “to coordinate in implementing electricity savings,” according to a statement on energy regulator ERAV’s website.
BG PC deputy director Do Binh Duong said in a separate statement that “adjustment of power loads, adjustment of production plans and implementation of electricity saving by enterprises will have a great impact on the energy system.”
The Ministry of Industry and Trade and state energy supplier Vietnam Electricity (EVN), of which BG PC is a part, did not respond to requests for comment.
Energy-saving measures appear to differ nationally. An official at an industrial estate in another northern province said manufacturers have been asked to reduce energy consumption on some days this month.
Weather conditions are less challenging than in 2023, but authorities have boosted coal imports and encouraged energy conservation to avoid shortages.
In March, foreign chambers of commerce urged the government to guarantee power supplies, with South Korea’s KoCham saying semiconductor companies had postponed investment decisions due to the power supply risk.
