The newswire reveals that Apple suppliers Luxshare Precision Industry and Foxconn have already started test production of the Apple Watch in northern Vietnam, with the primary purpose of producing the device outside of China for the very first time, three sources with direct knowledge of the matter told Nikkei Asia.

Vietnam is already Apple's most crucial production hub outside of China as it produces a wide range of flagship products for the US firm, including iPad tablets and AirPods earphones.

However, the Apple Watch is considered even more sophisticated, according to industry experts, who say that squeezing so many different components into such a small case requires a high degree of technological skill. Indeed, producing the device would mark a major win for Vietnam as it attempts to further upgrade its tech manufacturing sector.

Furthermore, the Japanese news outlet points out the firm has also continued to shift iPad production to the country after COVID-related lockdowns in Shanghai led to severe supply chain disruptions.

BYD of China was the first to assist with this shift, although sources told Nikkei Asia that Foxconn is now helping build more iPads in Vietnam. In addition, Apple is also in talks with suppliers in order to build test production lines for its HomePod smart speakers in the country.

With regard to the MacBook, the tech giant has requested that suppliers set up a test production line in Vietnam, two sources said. However, progress in moving mass production to the country has been slow, partly due to pandemic-related disruptions, as well as notebook computer production involving a larger supply chain, multiple sources said. That network is currently based around production in China and is very cost-competitive, they added.

Apple's diversification to the Vietnamese market started with AirPods, which went into mass production in 2020. The innovative earphones were among the first Apple products to have their assembly shifted out of China following a trade war between Washington and Beijing breaking out under the former Trump administration.

This move signaled a change of approach for Apple, which had been dependent on China for almost all of its production needs for several decades.

With regard to Vietnam, Apple's shift, along with US-China tensions more broadly, represent something of a boon. In line with this, the number of Apple suppliers with facilities in the country has increased to at least 22 from 14 in 2018, according to details given by Nikkei Asia's analysis of the firm’s latest available suppliers list and interviews with sources.

Furthermore, several other major electronics manufacturers such as Google, Dell, and Amazon have also set up production in the country as they seek to diversify beyond China, Nikkei Asia has previously reported.