Is Vietnam trying to manage Foxconn's power demand?

Is Vietnam trying to manage Foxconn's power demand?

It seems Vietnam’s success as a manufacturing base may be challenging its ability to power growth. Some reports are suggesting that Vietnamese officials have called on Apple supplier Foxconn to reduce power use by 30% at its assembly plants in the north of the country, an area that suffered power outages last year.

Foxconn is the world's largest contract electronics manufacturer; it is said to have half a dozen plants in northern Vietnam.

While there does not appear to be a formal government acknowledgment of such a request, the Reuters news service cites sources saying that it went to multiple manufacturers.

That said, this is not being presented as a requirement but as a precautionary measure. Last summer apparently saw a power shortage that led to US$1.4 billion dollars in lost output. Indeed, the Reuters’ source says that government has asked coal-fired power plants to delay maintenance to meet higher electricity demand in the hottest months.

Weather conditions are less challenging than in 2023 but authorities have boosted imports of coal and encouraged energy-saving to avoid shortages.

Of course Vietnam is heavily reliant on foreign investment – but the country is also seen as a useful alternative for oversees companies from industries such as semiconductor manufacturing given the perceived risk of investing in China at the moment.

However, power could still be an issue. The prime minister has already promised nervous foreign investors that power shortages will not happen again.

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