Vietnam Requests Power Reduction from Foxconn to Prevent Outages

Vietnamese officials have requested that Apple supplier Foxconn voluntarily reduce its power consumption by 30% at its northern assembly plants. 

This measure aims to prevent a repeat of last year’s electricity outages, which resulted in over a billion dollars in lost output. 

According to sources familiar with the matter, the request, described as an “encouragement” rather than a requirement, has not affected production.

Preventive Measures:

Multiple manufacturers have been requested to take energy-saving measures as a precautionary step to avoid power shortages similar to those experienced last summer. 

The power shortages during May and June 2023 caused significant disruptions in business operations in the north, leading to an estimated $1.4 billion loss, or 0.3% of Vietnam’s gross domestic product, according to preliminary estimates by the World Bank.

Vietnam’s Strategy to Attract Investment

Vietnam has been actively attracting multinational companies, particularly those looking to diversify their manufacturing bases away from China due to rising trade tensions with the U.S. In the past year, Apple has increased its number of suppliers in Vietnam from 25 to 35 and has committed to further investments.

Southeast Asia depends heavily on foreign investment for its economic growth and has been targeting energy-intensive industries, such as semiconductor manufacturing. Despite these efforts, last summer’s heatwave exposed the country’s power infrastructure vulnerabilities.

Government Response and Future Plans:

In response to the power shortages, Prime Minister Pham Minh Chinh assured foreign investors in March that such shortages would not recur. 

The government has also taken steps to manage electricity demand, including asking coal-fired power plants to postpone maintenance during the hottest months to ensure a stable power supply.

Uncertain Duration and Scope:

The specifics of the request to Foxconn, such as the sender, timing, and duration of the voluntary power reduction, remain unspecified. One source indicated that the request is open-ended. 

All sources requested anonymity as the details of the matter have not been made public. Apple did not react to requests for comment.