Daily Management Review

Foxconn, Apple’s Largest Contract Manufacturer, Asked To Curtail Power Usage By Vietnam: Reports


Foxconn, Apple’s Largest Contract Manufacturer, Asked To Curtail Power Usage By Vietnam: Reports
According to two people with knowledge of the situation, Foxconn, an Apple supplier, has been urged by Vietnamese authorities to voluntarily cut power use at its assembly factories in the country's north by 30% after power disruptions occurred there last year.
Two additional industry insiders indicated that the request for energy-saving measures was addressed to various industries. It is a preventative move meant to avoid a repetition of the previous summer, when a power outage cost over a billion dollars in missed production.
According to one of the persons, the request made to Foxconn was "an encouragement" rather than a mandate and had no effect on production.
Multinational corporations are flocking to Vietnam, some hedging against their traditional manufacturing base of China in the face of escalating trade tensions with the United States.
Apple pledged last month to increase its expenditure in the nation, where it has increased its supplier count from 25 to 35 in the previous year.
The country in southeast Asia has been attempting to draw in energy-intensive businesses like semiconductor production in order to support its economy, which is dependent on foreign investment.
But in May and June of last year, a heat wave set off a power outage that disrupted northern industry and cost $1.4 billion, or 0.3% of GDP, according to preliminary estimates from the World Bank.
Pham Minh Chinh, the prime minister, promised foreign investors in March that there would be no more power outages.
One of the persons added that in order to satisfy the increased demand for electricity during the warmest months, the government has urged coal-fired power facilities to postpone maintenance.
The individuals did not say who made the requests, when they were delivered to Foxconn, or how long the voluntary power consumption reduction would be required. Someone stated that the request was not limited.
Due to the confidentiality of the information, all sources requested to remain nameless. A request for comment from Apple was not answered.
The largest contract electronics manufacturer in the world is Foxconn, formerly known as Hon Hai Precision Industry. It has six sites in northern Vietnam, one of which is in the province of Bac Giang, where local officials claim it assembles iPads and MacBooks for Apple.
According to a statement posted on the website of power regulator ERAV, state-owned provincial power distributor Bac Giang Power Company stated in March that it had requested authorities and industrial parks "to coordinate in implementing electricity savings."
In a separate statement, Do Binh Duong, Deputy Director of BG PC, stated that "adjustment of power loads, adjustment of production plans, and electricity saving implementation of enterprises will have a great impact on the power system".
Requests for comments were not answered by the Ministry of Industry and Trade or the state-owned electricity company Vietnam Electricity (EVN), of which BG PC is a division.
Energy-saving techniques seem to vary across the country. A representative of an industrial park in a different northern region stated that firms had been requested to lower their electricity usage on certain days this month. 
Although the weather is not as bad as it was in 2023, the government has increased coal imports and promoted energy conservation in order to prevent shortages.
Foreign chambers of commerce called on the government to ensure a steady supply of electricity in March. The KoCham in South Korea stated that semiconductor businesses have postponed investment decisions due to concerns about power supply risk.