Vietnam: A new bright spot in global electronics supply chain

Accordingly, not only serving domestic demand, enterprises in the electronics supporting industry are expanding operations in the international market. With strong investment and technology transfers from “giants” in the electronics industry, Vietnam is becoming an important link in the global supply chain.

The electronics industry in Vietnam covers many areas, including the manufacturing of components, accessories, processing and assembly of complete products. In particular, the manufacturing and processing of components is taking up a majority of the investment structure, reflecting the great demand from international corporations investing in Vietnam. Although the number of projects on completing final products is somewhat smaller, the amount of investment capital poured into these projects is very large, demonstrating the interest of investors who have always considered Vietnam as a major production center.

Vietnam is gradually becoming an indispensable link in the global electronics supply chain

According to Tran Thanh Hai, Deputy Director of the Foreign Trade Agency under the Ministry of Industry and Trade, Vietnam is gradually becoming an indispensable “link” in the global electronics supply chain thanks to strong investment from large corporations such as Samsung, Apple, LG, and Intel.

“The shift of global supply chains from China to Vietnam is the result of the open-door policy, participation in free trade agreements (FTAs) and efforts to improve Vietnam's infrastructure in recent years,” said Tran Thanh Hai.

Economist Nguyen Tri Hieu assessed that political stability and security are among the important factors helping Vietnam attract international investors in the field of electronic supporting industry.

“In the context of trade tensions between the US and China, many businesses are looking for alternative production locations to minimize risks and Vietnam has quickly become a prioritized destination,” - Nguyen Tri Hieu said.

A typical example is the investment of Kam Kiu Aluminum Group, Hong Kong (China) recently in a factory producing aluminum accessories for electronic devices, smart devices (phones, computer screens, speakers, watches) and auto parts with a total expected investment of US$100 million. Notably, the investor chose Vietnam not only because of the practical support policies from the Government but also because of the increased labor market quality and Vietnam’s active participation in new-generation trade agreements. These factors help reduce tariff barriers for Vietnamese exported products to major markets such as the US, EU and Asia.

The presence and expansion of major international corporations such as Samsung, Apple and their manufacturing partners are creating a push for the electronics industry in Vietnam. Thanks to Samsung investment worth billions of dollars to turn Vietnam into its largest manufacturing hub outside of the Republic of Korea, and Apple increasing production through partners such as Foxconn, Luxshare and GoerTek, Vietnam is emerging as an important link in the global electronics supply chain.

Specifically, Apple has asked Foxconn to open a MacBook production line in Vietnam from 2023, with initial investment of US$1.5 billion and a plan to expand another US$300 million in Bac Giang. Luxshare and GoerTek are also increasing their scale of operations, with hundreds of millions of US dollars invested in factories and tens of thousands of workers recruited. Pegatron - another major supplier is also carrying out many large projects with total investment of nearly US$1 billion in Hai Phong City.

These huge investments not only strengthen Vietnam's position in the global electronics component manufacturing sector, but also create numerous job opportunities and promote the development of supporting industries, thereby, Vietnam is increasingly confirming its strategic role in the international electronics supply chain, opening up great opportunities for the sustainable development of the electronics industry in the future.

To address these issues, in the past time, the Vietnamese Government has actively implemented support programs to enhance the competitiveness of domestic supporting industry enterprises. The Ministry of Industry and Trade has implemented many international cooperation projects to help FDI and domestic enterprises cooperate more effectively. One of the outstanding initiatives was the cooperation program between the ministry and Samsung Group in training consultants for the supporting industry. This program helped improve production processes at Vietnamese enterprises, and their product quality and competitiveness in the international market.

In addition, the cooperation with Toyota Group has brought positive results in improving production and enhancing product quality. The Ministry of Industry and Trade has also coordinated with the Republic of Korea to establish the Vietnam- Technology Advice and Solutions from Korea Center (VITASK), an organization that plays an important role in supporting electronic supporting industry enterprises to improve production capacity and quality.