The change is due to rising labor costs in China and tariffs from the trade war with the U.S.
What you need to know
- Google is moving production of its Pixel smartphones to Vietnam.
- Rising labor costs and increasing tariffs in China from the trade war are the main reasons.
- Google will also be shifting its production of other American-bound hardware products to other countries.
It looks as if Google's Pixel smartphone is about to swap its made in China sticker for a made in Vietnam one. A recent report from Nikkei shows that Google began work this summer to convert an old Nokia factory in Vietnam for the production of its Pixel smartphones.
The move comes in response to rising costs of labor in China and the threat of ever-increasing tariffs from the trade war. Two sources close to the matter said, "this is the same province where Samsung developed its smartphone supply chain a decade ago."
Google will have access to an experienced workforce, while also diversifying its hardware manufacturing. That's important if Google hopes to meet its goal of shipping 8 to 10 million smartphones this year. It's double from a year ago, but recently Google has seen a surge in sales after releasing the Pixel 3a. According to stats from Counterpoint Research, Pixel sales are up 88% year-over-year in the second quarter of 2019.
This isn't the first time Google has moved hardware production since the trade war began. Back in June, it moved production of its American-bound Nest products and motherboards to Taiwan. Eventually, Google plans to move the production of the majority of its American-bound products outside of China.
The shift for the Pixel 3a to Vietnam is expected to happen before the end of the year, while sources say smart speaker production will most likely be moved to Thailand.
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