Apple Inc’s suppliers are in talks to produce the Apple Watch and MacBook in Vietnam for the first time, Nikkei Asia reported on Tuesday, citing people familiar with the matter.

Chinese Apple supplier Luxshare Precision Industry and iPhone assembler Foxconn have begun test production of the Apple Watch and MacBook in North Vietnam, according to reports.

Apple is shifting some iPhone production from China to other markets, including India, where it began manufacturing the iPhone 13 this year, and plans to assemble iPad tablets.

India, the world’s second-largest smartphone market alongside countries such as Mexico and Vietnam, has become increasingly important to contract manufacturers supplying US brands as they try to diversify production away from China.

Apple, Foxconn and Luxshare Precision did not immediately respond to a Reuters request for comment.

Last week, Taiwanese contract manufacturer Foxconn gave a cautious outlook for the current quarter after posting better-than-expected results, citing lower demand for smartphones following a pandemic-induced boom.

Like other global manufacturers, Foxconn, officially called Hon Hai Precision Industry Co Ltd, has faced severe chip shortages that have hurt production as bottlenecks from the pandemic remain and the war in Ukraine further strains logistics channels.

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