Microsoft’s plan to consolidate all of Nokia's factories under one roof in Vietnam is being challenged by new restrictions on the importation of old machinery that go into effect this month.
Many parts for the mega assembly line that Microsoft wants to build from equipment currently being used in Hungary, Mexico and mostly China don't meet the standards laid out by the Vietnamese Ministry of Science and Technology.
The ministry requires that 80 percent of an imported assembly line be new or less than five years old.
Earlier this month, Microsoft sent a statement to the ministry and the government of Bac Ninh Province insisting that it had no plans to dump garbage equipment in Vietnam, news website VnExpress reported.
The technology giant, which picked up Nokia’s phone business in a US$7.2 billion deal last April, is shutting down the cell phone brand's former handset factories in Hungary, Mexico and China.
Nokia’s plant in the northern province of Bac Ninh, which began operating last June, was scheduled to cover all global production.
Microsoft said it planned to install the old equipment in its Bac Ninh plant to scale up production.
The company asked the ministry and the provincial government to render a decision by September 1, when the mechanical restrictions take effect.
The ministry responded by requesting a detailed list of the machines and their condition before rendering a judgement.
Do Hoai Nam, director of the ministry's Technology Inspection Department, told VnExpress they need to know the specific age and quality of each device before deciding whether or not Microsoft will have to refurbish them before importing them to Vietnam.
“The ministry has asked Microsoft to produce extra documents and details. Generally, we want to provide the best conditions for their expansion in Vietnam.”
The technology transfer, if approved, will take until next February and expand the Bac Ninh plant from 6 assembly lines to 39.
The $300 million factory produced 10.8 million cell phone products valued at an estimated $193 million last year.
If the expansion plan goes ahead, it will raise the Bac Ninh plant's annual output threefold and expand its portfolio of products to include more complicated devices.
Microsoft says the expanded factory will require a larger workforce before it can meet its annual export target of 76.4 million products worth $1.86 billion.