The shift came as a result of rising Chinese labor costs, as well as added burden from tariffs due to the ongoing U.S.-China trade war.
The U.S. internet giant has begun converting an old Nokia factory in the northern Vietnamese province of Bac Ninh, Nikkei reported, citing unnamed sources familiar with the plans.
According to the outlet, the company plans on moving some of its Pixel 3A smartphone production to Vietnam by the end of year, and intends on eventually moving most of its U.S.-bound hardware production out of China, including the Pixel phones and smart speaker Google Home.
Google plans on shipping about 8 million to 10 million smartphones this year, double from last year, with Vietnam forming a key part in its drive for growth in the global smartphone market, the outlet added.
For its smart speakers, some of its production will likely be transferred to Thailand, Nikkei reported, adding that product development and initial production from its hardware range will remain in China.
Google did not respond to a request for comment.
The ongoing trade dispute between the world’s two largest economies escalated last week after President Donald Trump raised tariffs on some $550 billion worth of Chinese goods. The move came hours after the regime unveiled retaliatory tariffs on $75 billion of U.S. imports.
From Sept. 1, the United States will be levying a 15 percent tariff on a portion of a list that contains over $125 billion of targeted goods from China including smartwatches, Bluetooth headphones, flat panel televisions and footwear.
A 15 percent tariff will be levied on the remainder of the list, which includes smartphones, laptops, toys and clothing, from Dec. 15.
Google is the latest in a raft of companies that are planning to shift part of its American-bound production away from China since the onset of the U.S.-China trade dispute more than a year ago.
Several U.S. tech companies including HP Inc., Dell Technologies, Microsoft Corp., Amazon.com Inc., Sony Corp., and Nintendo Co. Ltd. are reportedly looking to move some of their manufacturing out of the country.
Meanwhile, apparel retailers Levi Strauss & Co., Gap Inc., Steve Madden Ltd., and Macy’s Inc. have also acted to relocate their production away from China.