Vietnam moved up to become “a base” of global phone production

Vietnam is emerging as a new production center in the global supply chain with the presence of leading names in the technology field such as Samsung, Apple, and Xiaomi…

With its solid fundamentals and position as one of the most attractive investment destinations for international investors, Vietnam gained a lot of trust from the top smartphone companies with a series of large FDI investments.

Vietnam, a rising “star” in the global supply chain

In a recently published article, the British investment magazine Moneyweek said that “Made in Vietnam” products were asserting their position in the world market. According to Moneyweek, many multinational corporations, especially in the electronic field have the same consideration that “made in Vietnam” products are a guarantee of quality.

According to the Ministry of Industry and Trade, in 2021, Vietnam’s electronics industry accounted for 17.8% of the entire industry, mainly producing electronic products, computers, and components…

According to a report by the Ministry of Industry and Trade, for the whole year of 2021, Vietnam produced 233.7 million mobile phones, up 7.6% and the production value of phone components reached VND 580,800 billion, up 29.5 % compared to 2020. Along with that, the export turnover of phones and components in the whole country reached 57.5 billion USD, up 12.4% compared to 2020 and accounting for over 17.1% of the total export turnover of goods in 2021.

Also in 2021, Vietnam’s FDI attraction achieved many positive signals. Foreign investment capital into Vietnam reached 31.15 billion USD, up 9.2% over the same period in 2020. This shows that foreign investors have placed great confidence in Vietnam’s investment environment.

FDI attraction capital data of the Ministry of Planning and Investment in the first 5 years of 2022 also shows that foreign investors have continuously considered Vietnam as an attractive destination when pouring about 7.71 billion USD into Vietnam, up 7.8% over the same period last year.

Considered a rising “star” in the global supply chain, Vietnam has the appearance of almost the world’s leading names in electronics and technology such as Samsung, Intel, LG, Foxconn, Canon, Panasonic, and Electronics, Nokia, Meiko, Apple, Microsoft, Qualcomm… Among these, especially Samsung of Korea, by the end of 2021, the amount of capital that this group invested in Vietnam reached nearly 18 billion USD.

Samsung Vietnam currently operates 6 factories in Bac Ninh, Thai Nguyen, and Ho Chi Minh City, an R&D center in Hanoi, and a sales entity. Currently, more than 50% of global Samsung phone production is produced in Vietnam and exported to 128 countries. In the development plan of the global Samsung Group, Vietnam is surpassing its role as a key global production base and will become a strategic center for R&D.

Besides Samsung, although it has not yet produced iPhones in Vietnam, right from the beginning of 2021, Foxconn Technology Group – Apple’s main manufacturing partner has invested in building a factory in Bac Giang with a total registered investment capital of 270 million USD. This project specializes in the production of tablets and laptops with a capacity of about 8 million products per year.

Previously, all iPad products were assembled in China, but now they have expanded to Vietnam following Apple’s request. Leading Apple products such as iPad, AirPods, MacBook, AirPods, and AirPods Pro are now manufactured in Vietnam and exported around the world.

Most recently, Xiaomi, a Chinese technology company – the world’s manufacturing center, also expanded production to Vietnam. DBG Technology Vietnam, a partner of Xiaomi, has built a phone assembly manufactory in Thai Nguyen, worth $80 million, and put into operation from June 2021. This factory is expected to produce 20 million products per year not only phones but also computers, home electronics, and electronic components.

A promising market

As experts identified, key players in the technology field choose Vietnam because of its potential market.

Vietnam is located in a fast-growing and dynamic industry area. In addition, there is a domestic market of nearly 100 million people and direct access to the ASEAN market of 600 million people, a large international export market thanks to participation in Free Trade Agreements (FTAs).

Besides, Vietnam is also a country with an abundant labor force, young age, and especially low cost compared to the whole labor market in the world. The stability also makes Vietnam an attractive option.

Research and development (R&D) projects are receiving special incentives and have great potential for development when Vietnam can provide high-quality human resources for this field. The success of Samsung Vietnam’s R&D Center is an example of this statement.

Notably, especially for the smartphone-using group, Vietnam also reaches the high rate of smartphone users in the world, with an average of 1 smartphone per person. This is also an important factor for Xiaomi to build production plants because Vietnam is Xiaomi’s big market, second only to China.

GfK’s 2021 statistics showed that, despite the impact of the epidemic, the number of smartphones sold in the Vietnam market grew well from 15.7 million units in 2020 to 16.8 million units.

The proportion of smartphones with basic phones is also growing year by year. In 2020, the corresponding figure was 71% and 29%, and by 2021 it was 80% and 20% respectively. The money spent buying a smartphone has also increased significantly, from about 257 USD (5.8 million VND) in 2017 to 292 USD (6.6 million VND).

“Vietnamese people prefer to upgrade smartphones with higher configurations, support for new technologies such as 5G and large memory, although the average retail price of smartphones tent to increase in 2021.“, a GfK representative said.

Source : Kenh14