Google is reportedly planning to move some Pixel 3a production to Vietnam.

Google is reportedly planning to move production of its Pixel smartphones from China to Vietnam, amid a backdrop of increased labor costs and the U.S. trade war with China.

According to the Nikkei Asian Review, citing two sources familiar with the plans, Google has started work on converting an old Nokia factory in Vietnam to produce Pixel phones. More specifically, it’s believed that the Mountain View company plans to shift production of some Pixel 3a phones to Vietnam before the end of 2019.

The sources told the outlet that Google also plans to eventually move all its U.S. hardware products outside China, including Pixel devices and Google Home speakers. In the case of the latter, some production is tipped to move to Thailand. But that doesn’t necessarily mean the company is abandoning China completely.

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“Google are likely to keep some activities inside China. The U.S. company knows that if it is going to be serious about making hardware, it could never give up the massive Chinese market,” a source told the Nikkei Asian Review. “However, they also understand that, due to rising costs and the macro-environment, they need to have production outside China for the long term in order to support their hardware manufacturing.”

It’s reported that Google plans to ship between eight and 10 million smartphones in 2019 — that’s double last year’s figure. This wouldn’t be a surprise though, as Google previously revealed that it sold twice as many phones in Q2 2019 compared to Q2 2018. This was largely due to the mid-range Pixel 3a series, starting at $399.

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