Vietnam's Ascendance: A Potential Global Manufacturing Hub

Investment Trends in Vietnam's Electronics Industry

Many companies, especially in the electronics industry, are spending a lot of money investing in Vietnam. For example, in February, South Korean electronics giant Samsung announced it would invest an additional $920 million in Vietnam.

The famous German broadcaster – Deutsche Welle (DW) said that there are signs that the Vietnamese economy is benefiting from the supply chain shift. Specifically, both Apple and Google plan to manufacture some of their products in Vietnam.

Tech Giants' Production Bases in Vietnam

At the Conference on the situation and proposed tasks and solutions to remove difficulties and support production and business in the last 6 months of the year organized by the Ministry of Planning and Investment at the end of June, Ms Do Thi Thuy Huong, Deputy Chairman of the Vietnam Association of Supporting Industries (VASI), member of the Executive Committee of the Vietnam Association of Electronic Enterprises (VEIA) shared that manufacturers in the global supply chain of large firms are gradually focusing on Vietnam.

Apple and Google's Manufacturing Plans

Accordingly, Apple has moved 11 factories of Taiwanese enterprises (China) in its supply chain to Vietnam; Many other firms such as Foxconn, Luxshare, Pegatron, and Wistron also expand their existing production facilities in Vietnam.

Specifically, according to Nikkei Asia, Apple is moving some iPad production from China to Vietnam. At the same time, the Japanese newspaper said this is “the first time” Apple has done this. It is known that in addition to the current production transfer plan, Apple has worked with Chinese company BYD to build an iPad production line in Vietnam. BYD is expected to go live soon, but may only produce a small number of iPads at first.

Elsewhere, Digitimes reported that Google is considering transferring orders for new generation smartphones to manufacturing partners’ factories in Vietnam. The purpose of the US corporation is to avoid risks from US-China trade tensions and China’s epidemic blockades.

Accordingly, Google will shift a small part of Pixel 7 orders to production in Vietnam for testing and “training personnel”. Digitimes said that Google’s new smartphone production line in Vietnam will be established after 2023. At this time, its latest smartphone generations will be manufactured in the Southeast Asian country.

Vietnam's Role in Global Supply Chains

Previously, talking to the press, the Vice Chairman of the Vietnam Association of Supporting Industries (VASI) once said that the root cause of the trend of shifting supply chains into Vietnam, largely comes from, China having relatively developed electronics and information technology industry.

“In the global supply chain, they have grown to a higher level than just assembling as before. Vietnam is quite similar to China in electronic manufacturing activities, both in terms of labor and geographical location, infrastructure, logistics, etc. and will be very suitable to receive the flow of capital, which is also the flow of technology,” said Ms Do Thi Thuy Huong.

Economic Impact of Supply Chain Shift

The famous German television company – Deutsche Welle (DW) said that there are signs that the Vietnamese economy is benefiting from the supply chain shift. In an interview with Reuters, Mr Raphael Mok from consulting firm Fitch Solutions said: “Vietnam will be one of the main beneficiaries of the supply chain shift”.

German Companies' Interest in Vietnam

Many companies, especially in the electronics industry, are spending a lot of money investing in Vietnam. For example, in February, South Korean electronics giant Samsung announced it would invest an additional $920 million in Vietnam.

According to German e-commerce magazine Elektronik Praxis, Chinese electronics corporations such as Luxshare Precision Industry, Goertek, and Pegatron are also moving their bases to Vietnam.

Daniel Müller, Director of Germany’s Asia-Pacific Business Association, said that Vietnam is always on the priority list of German companies.

Vietnam's Potential as a Manufacturing Hub

In an interview with Caijing magazine (China), Dr Oliver Massmann, General Director of Duane Morris Vietnam LLC, said that Vietnam currently has enough factors to become the world’s factory such as human resources, technology, government support as well as foreign investment.

“Vietnam has grown so fast economically and politically over the past five years, and within the next five years we may see a change that we couldn’t even have foreseen,” he said.

Reference: Cafef