28 Dec 2023 -
 General

Vietnam ascends as electronics manufacturing hub

vietnam

Vietnam is rapidly establishing itself as a major player in global electronics manufacturing, capitalising on the shift of production bases away from China. This transformation is driven by the country’s advantageous use of free trade agreements, attractive tax incentives, and competitive labour costs, making it an attractive destination for international investment.

A pivotal event in this emerging narrative, according to Supply Chain Dive, was a high-profile meeting in September between U.S. President Joe Biden, Vietnamese Prime Minister Pham Minh Chính, and executives from leading technology firms like Google, Amkor, Intel, and others. This gathering highlighted Vietnam’s growing importance in U.S.-Vietnam trade relations, particularly in the electronics and semiconductor industries.

The shift from China, a dominant force in Asia’s contract production, is due to deteriorating U.S.-China trade relations, prompting American companies to seek more favourable manufacturing environments. Vietnam has responded by targeting significant investments in semiconductor and advanced electronics manufacturing, drawing major companies. Notable developments include Amkor’s announcement of a $1.6 billion factory, Google’s plans to manufacture Pixel smartphones, and Marvell’s decision to establish a design centre in Ho Chi Minh City.

These corporate investments are complemented by a strategic U.S.-Vietnam partnership focused on developing a resilient semiconductor supply chain. Vietnam’s increasing role as a manufacturing hub is further evidenced by a 54% increase in foreign direct investment in October 2023, with the majority directed towards processing and manufacturing.

Vietnam’s strategy includes offering enticing investment incentives, maintaining lower labour costs than China, and engaging in free trade agreements with various nations. This approach has led to a significant increase in U.S. goods imports from Vietnam, marking a shift in the global manufacturing landscape and positioning Vietnam as a key electronics manufacturing hub.

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