Development potential of electronics manufacturing service industry in Vietnam

Vietnam’s sector of electronics manufacturing services is rapidly emerging as a lucrative market, drawing significant attention from investors. The country’s competitive labor costs, well-established transportation infrastructure, and favorable support policies have enticed numerous prominent players in the industry to establish a presence in Vietnam. Moreover, the industry is witnessing promising opportunities fueled by the advancement of cutting-edge technologies like the Internet of Things (IoT) and artificial intelligence (AI). To gain deeper insights into the current potential of the electronics manufacturing service industry, continue reading the following article that sheds light on its promising prospects.

1. What is Electronics Manufacturing Service?

1.1. What is electronic manufacturing service?

Electronic manufacturing services encompass the comprehensive process of manufacturing and assembling electronic devices, including the creation of electronic components, printed circuit boards, circuit soldering, and the assembly and inspection of electronic products. These services are typically provided by proficient manufacturers or specialized outsourcing companies in the electronics industry. Utilizing these services enables businesses to streamline production costs, boost productivity, and focus on their core operations.

1.2. What activities and services does electronic manufacturing service include?

Electronics Manufacturing Service (EMS) encompass a range of activities and services, including:

• Product design and development: This involves the design of printed circuits, hardware, and software for electronic devices.
• Component manufacturing: EMS includes the manufacturing of various components such as microprocessors, surface-mount components, small electronic components, and other necessary parts.
• Printed circuit board assembly: This process involves assembling components and soldering circuits as per requirements.
• Inspection and quality control: EMS providers ensure thorough inspection and quality control measures to ensure proper operation and compliance with established quality standards.
• Supply chain management: EMS companies handle various aspects of the supply chain, including sourcing component suppliers, managing warehouses, shipping, and order management.

These manufacturing services, which were previously indicated, are the company’s area of expertise. Such a business could concentrate on making electronics or provide manufacturing services for several sectors.

1.3. Benefits of working with an EMS provider

Working with EMS (Electronics Manufacturing Service) suppliers for electronics manufacturing services has several advantages, such as:.

• Strong base competency: EMS providers possess specialized knowledge and expertise in electronics manufacturing, ensuring the quality and reliability of products.
• Cost reduction: By leveraging EMS, businesses eliminate the need to invest in separate production infrastructure and equipment, resulting in significant cost savings.
• Increased production speed: EMS providers are equipped to meet the demands of on-time delivery, facilitating faster production turnaround.
• Focus on core competencies: Outsourcing manufacturing to EMS allows businesses to concentrate on their core areas of expertise, while leaving the manufacturing and supply chain management responsibilities to the EMS provider.
• Effective supply chain management: EMS companies have extensive experience and established partnerships with electronic component suppliers, ensuring a stable supply chain and minimizing risks associated with supply issues.
• Technology innovation and upgrades: EMS providers stay updated with the latest advancements in electronics manufacturing technologies, providing businesses with access to cutting-edge electronic technologies and enhancing overall production efficiency.

In short, these advantages significantly seem to be a key factor to reduce costs, increase production efficiency, and allow businesses to give priority to their core strengths.

2. Vietnam becomes an ideal destination for giants in the electronics manufacturing service industry

2.1. Overview of the electronics manufacturing service market

The Electronics Manufacturing Services (EMS) market is expected to register a compound annual growth rate (CAGR) of 9% during the forecast period (2021-2026).

The outbreak of the COVID-19 pandemic has significantly affected the global economy and countries, impacting many end-user industries, including electronics manufacturing. According to a survey conducted by IPC in March 2020, 40% of electronics manufacturers and suppliers globally believe that the consumer electronics industry will be the industry most affected by the COVID-19 pandemic. More than 24% of survey respondents predicted that the industrial electronics industry would be significantly affected, while 19% said that the automotive electronics segment would be hardest hit.

With the emergence of the trend of downsizing and adopting new technologies such as the Internet of Things (IoT) and 5G network connectivity, electronic component design and assembly have been revolutionized.

For instance, the improved antenna technology used by 5G communication base stations, such as MIMO, has increased the quantity and effectiveness of emission components.

In addition, government programs are working extremely well to encourage the market’s growth. In this regard, the Indian government introduced the production Linked Incentive (PLI) programme in August 2020 with the goal of promoting the production of electronics. A total of 22 firms submitted applications to participate in the program. Estimates indicate that the project brings in up to 110 billion INR in extra investment for the electronics manufacturing industry. The initiative is expected to cost INR 40.995 billion in total, which includes INR 40.951 billion in incentives and INR 440 million in administrative expenses.

2.2. Vietnam is a prospective market for the electronics manufacturing service sector.

Vietnam has emerged as a desirable destination for investors and holds significant potential in the electronics manufacturing service industry. Its appeal stems from various factors, including competitive labor costs, advantageous geographical location, and well-developed industrial infrastructure. As a result, numerous companies in the electronics manufacturing sector are drawn to Vietnam.

One key factor contributing to Vietnam’s attractiveness is its low labor costs, which play a crucial role in reducing production expenses. Additionally, Vietnam’s strategic geographic position provides easy access to major consumer markets like China and Southeast Asia. Furthermore, the country has made substantial investments in industrial infrastructure, creating a favorable environment for electronics manufacturing operations.

These advantages have prompted many prominent corporations to establish production facilities and expand their business endeavors in Vietnam. The influx of investment and growth in this sector has generated employment opportunities, increased incomes, and contributed to the overall economic development of the country

In conclusion, Vietnam is widely regarded as a promising market in the electronics manufacturing service industry, with the potential to become a significant global hub for electronics manufacturing in the region and beyond.

2.3. Future market trends

The electronics manufacturing services market is anticipated to exhibit a highly positive and promising trajectory in the future, driven by significant trends that shape the industry landscape.

• Enhanced connectivity and global supply chains: The growth of e-commerce and the rising demand for e-commerce companies will elevate the importance of connectivity and global supply chains. Service providers will need to optimize production processes, ensuring flexibility and efficient transportation to meet customer expectations.
• Advanced technology and IoT development: Technological advancements, particularly in the realm of the Internet of Things (IoT), will unlock new opportunities for the electronics manufacturing service industry. The increasing demand for smart and connected electronic products, spanning from smart home appliances to Industry 4.0, will require Electronics Manufacturing Service Companies to embrace and adapt to this transformative trend.
• Enhanced security and regulatory compliance: With the escalating complexity and frequency of cyberattacks and data breaches, security and regulatory compliance will emerge as critical concerns in the electronics manufacturing services industry. EMS providers must invest in robust security technologies and adhere to stringent data protection regulations to safeguard customer data and maintain trust.
• Development of innovation and research: In order to cater to the growing market demands, innovation and research will play a pivotal role in the electronics manufacturing service industry. Companies will need to invest in robust research and development capabilities to create cutting-edge products and solutions that deliver added value to customers.

3. NEPCON 2023 – “Electronics Industry Innovation Trends – The Future of Global Supply Chains”

3.1. About NEPCON 2023

NEPCON 2023 is a leading manufacturing expo in terms of the production industry and electronics manufacturing services. The event focused on “Electronics Industry Innovation Trends – The Future of Global Supply Chains”. NEPCON 2023 provides a platform for electronics professionals, businesses and manufacturers to exchange knowledge, share information and learn about new trends and innovations in the electronics industry.

NEPCON 2023 is an opportunity for electronics manufacturing manufacturers and service providers to gain access to new technologies, cutting-edge solutions, and state-of-the-art equipment. The event not only focuses on the traditional sectors of the electronics industry, but also promotes the development and application of new technologies such as AI (Artificial Intelligence), IoT (Internet of Things), Blockchain and many more.

In addition to showcasing innovative trends in the electronics industry, this event are also expected to create lots of opportunities for businesses to showcase their capabilities, seek opportunities for cooperation and expand business networks. The event also attracts the participation of top experts and senior managers in the industry, creating an environment for exchange and learning.

3.2. Why don’t you participate in NEPCON 2024?

In the context that the electronics manufacturing service sector is likely to have a great potential growth rate, NEPCON 2024 will be an important event for all of the economic players. In a deeper evaluation, the mentioned showcase provides an excellent platform to get access to the most advanced innovations, stay up to date with current market trends, and discover many other growth opportunities.

With the potential for development and the NEPCON event, the electronics manufacturing service industry in Vietnam promises to continue contributing to economic development and attracting the attention of domestic and foreign businesses.

4. Summary

The electronics manufacturing services in Vietnam segmentation has remarkable development potential. By attracting investors and becoming a potential market, Vietnam is taking advantage of the growth of the global electronics industry, competitive labor costs, advanced transportation infrastructure and investment support policies. NEPCON thus served as an important event to enjoy this growth potential.

Participation in NEPCON 2024 thus can effectively help the domestic economy continue to contribute to economic development and attract the interest of domestic and foreign businesses.