Korean and Chinese magnet firms, including an Apple supplier, are set to open factories in Vietnam, according to documents and people familiar with the plans, amid a push to diversify supply chains away from China and defend against Sino-U.S. tension.

South Korea’s Star Group Industrial (SGI) and China’s Baotou INST Magnetic would join companies in sectors as varied as electronics and automobiles in shifting assembly lines against a backdrop of increasing trade restrictions, with clients even requesting the move, the people said.

China is dominant in magnets and the rare earth metals they are made from. The magnets are central to the manufacturing of such products as electric vehicles, wind turbines, weapons and smartphones, making the sector strategically important. Even so, there has been only limited effort to challenge China’s lead.

Neighbouring Vietnam, however, has untapped rare earth deposits second only to China’s, as well as a fledgling processing industry, giving the country the potential to be a much bigger competitor, industry insiders said.