Vietnam has become an attractive market to foreign investors in the field of electronic component manufacturing.
The latest data from the Ministry of Industry and Trade show that the support industries for the electronics sector currently account for more than 80 percent of the value of this sector, including the manufacturing of components, materials, molds and mechanical processing. The manufacturing of semiconductor microchips accounts for more than 70 percent of the value of electronics support industries.
The Vietnamese electronics sector has attracted foreign direct investment (FDI) from major firms, such as Samsung and Canon. Vietnamese businesses are capable of manufacturing most basic electronic components. About 200 domestic companies have become component suppliers for Samsung. Many businesses can also manufacture hi-tech details. For example, Viettel has become a mobile phone manufacturer.
However, the support industries for the electronics sector remain underdeveloped. The local content of electronic products is still low, 20-30 percent, including mostly plastic and metal details and packaging.
Vietnamese electronics companies concentrate mostly on assembly, purchasing all integrated circuits abroad because they lack skilled workers to manufacture semiconductor microchips.
According to Hanel Joint Stock Company General Director Nguyen Dinh Vinh, Vietnam has been developing support industries for more than three decades but has yet to achieve the desired results - unlike Japan and the Republic of Korea, which built strong support industries within two decades.
In fact, most Vietnamese companies remain incapable of participating in the value chains of multinational groups. To become electronic component and circuit suppliers, they need to invest trillions of dong in manufacturing.
Focusing on key businesses
Do Thi Thuy Huong from the Executive Board of the Vietnam Electronic Industries Association, says domestic companies need to associate with foreign-invested high-tech groups in order to create a breakthrough in the development of support industries. To be eligible to join the supply chains of major groups operating in Vietnam as well as global value chains, domestic firms have to ensure product quality, on-time delivery and reasonable prices. “Associating with multinational groups is a suitable solution for Vietnamese companies, providing their workers with immediate jobs. But in the long term, Vietnamese companies need to create products with Vietnamese brands,” Huong said.
Associate Professor, Dr. Nguyen Duc Minh, Deputy Director of the Institute of Electronics and Communications under the Hanoi University of Science and Technology, believes Viettel, BKAV and Vingroup will be key businesses of the Vietnamese electronics industry.
A representative of the Ministry of Industry and Trade’s Industry Agency said a network of domestic suppliers with global competitiveness will help minimize risks for the Vietnamese electronics sector and enhance its flexibility.
The domestic electronics sector currently has to import about 77 percent of product value. The local content of products remains very low. The state needs to put in place appropriate policies to create a breakthrough in the development of support industries for the electronics sector.
Source: VEN.VN, 27/03/2020