Alphabet’s (GOOGL) Google unit is planning to develop and manufacture its high-end smartphones in Vietnam this year, marking a phased exit from China. The company will start conducting new product introductions (NPI) for its Pixel, Pixel Pro, and Pixel Fold phones there. Meanwhile, development of the lower-end Pixel A series will continue in China for the time being, according to sources cited by Nikkei Asia.
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Google’s step mirrors rival Apple’s (AAPL) expansion into India, as American firms slowly diversify their supply chains away from China. Google already has a large supplier network in Vietnam that assembles its products, including Pixel smartphones. Hence, developing a smartphone from scratch in Vietnam should not be as challenging.
Why Is NPI Important?
NPI is one of the most important stages in smartphone manufacturing. It involves developing, verifying, and fine-tuning production processes for new electronic devices, involving hundreds of engineers from the company and suppliers. NPI demands heavy investment in testing equipment and tooling machines to ensure designs meet exact specifications.
Suppliers see NPI participation as a badge of honor, signaling their ability to handle a client’s latest products. Yet, both Apple and Google still run NPIs in China, despite having worked for years to diversify supply chains, given the process’ complexity in less mature ecosystems.
Google Exits China to Dodge Tariff Issues
Google’s moves come amid growing uncertainty over the Trump administration’s tariff policies, which have rocked supply chains since April 2025. Apple, for instance, has ramped up capacity in India and Vietnam. Apple’s NPI needs around 200-300 engineers at the supplier’s plant, signaling huge investment. If NPI fails, no new product will be launched that year, but fortunately this has never happened. The focus is on functionality, compatibility, and reliability for mass production.
Apple reportedly runs dual NPIs in India and China as backups, since the stakes are high. This doubles resources to avoid failure. If Google and Apple succeed outside China, it would be a big win in diminishing reliance on the world’s manufacturing hub.
Challenges in Shifting from China
Moving key manufacturing development from China is just one step, and expanding smartphone production overseas is hard. Beijing blocks exports of equipment and relocation of Chinese workers. For example, Apple suppliers face stricter Chinese customs checks on equipment exports, slowing iPhone expansion in India. Google’s Vietnam smartphone capacity plans last year also fell behind for the same reasons, two sources stated.
China makes tons of production and testing equipment, but Beijing makes it hard to export them, fearing loss of manufacturing edge.
Is GOOGL Stock a Buy?
Analysts remain highly optimistic about Alphabet’s long-term prospects. On TipRanks, GOOGL stock has a Strong Buy consensus rating based on 27 Buys and seven Hold ratings. The average Alphabet price target of $338.25 implies 1.9% upside potential from current levels. Over the past year, GOOGL shares have surged 73.7%.
