EMS stands for Electronics Manufacturing Services, which is a term used for companies that design, manufacture, test, distribute and provide return/repair services for electronic components and assemblies for original equipment manufacturers.
Most big EMS companies are built in China since the country provides a huge source of materials, and the production cost can be reduced effectively. However, in recent years, Vietnam is gradually becoming the preferred choice for establishing new EMS. The reasons are attributed to Vietnam’s improving business policies, the participation in free trade agreements in recent years, and lower labor costs.
From 2016 to 2020, the electronics industry in Vietnam witnessed impressive growth with many FDI projects established and major electronics enterprises in the world invested in building high-tech electronic production facilities in Vietnam, namely Samsung, LG, and Foxconn. An article by Counterpoint Research in March 2021 stated that the EMS market in Vietnam would grow at a CAGR of 5% between 2020 and 2026.
Below are some of the big EMS companies in Vietnam.
Hon Hai Technology Group, better known as Foxconn, is a company that originated in Taiwan. Foxconn is the most notable in the field of electronics, information technology, and computers. In 2007, Foxconn established their first factory in Bac Ninh, Bac Giang, and other provinces in Vietnam.
According to Taiwan News, Foxconn's revenue in Vietnam has doubled from 3 billion USD in 2019 to 6 billion USD in 2020. In the first three months of 2021, the company planned to invest another 700 million USD in Vietnam to expand the production scale. New investments could bring the group 40 billion USD in revenue over the next three to five years.
Foxconn recently plans to invest an additional $700 million in Vietnam, expecting to bring in $10 billion in revenue in 2021 for the group.
Samsung Electronics Co., Ltd. is a South Korean multinational electronics company, one of the world’s largest producers of electronic devices. Samsung started its investment in Vietnam in 1996, and since then has been developing the business strongly in the country. The company is considered the biggest foreign investor in Vietnam.
Samsung has established some large factories in Vietnam, namely Samsung Electronics Vietnam, Samsung Display Vietnam, both in Bac Ninh; Samsung Electronics Vietnam Thainguyen in Thai Nguyen and Samsung Electronics HCMC CE Complex in Ho Chi Minh city. These four factories brought Samsung a revenue of 63 billion USD in 2020.
Intel Corporation is an American multinational corporation and technology company located in Silicon Valley. The company supplies microprocessors for computer system manufacturers, while also produce motherboard chipsets, network interface controllers, integrated circuits, etc.
More than 15 years ago, Intel was the first American company to announce an investment project of 1.04 billion USD in Saigon Hi-tech Park, marking the beginning of the semiconductor industry in Vietnam. The project has, since then, fully formed and is now a world-class high-tech manufacturing plant, opening up opportunities for Intel and Vietnam in the coming years.
In 2020, despite being affected by Covid-19, Intel Products Vietnam (IPV) still recorded a record export turnover of 13.1 billion USD, accounting for nearly 70% of the total export value of Saigon Hi-tech Park. At the beginning of 2021, Intel Corporation announced an additional investment of 475 million USD in the IPV plant, bringing the total investment capital in Vietnam to more than 1.5 billion USD.
LG Electronics Inc.
LG Electronics Inc. is a South Korean multinational electronics company, specialized in producing consumer electronics, home appliances, and mobile communications. However, the company announced its withdrawal from the mobile phone business worldwide in April 2021.
In Vietnam, LG currently owns 3 factories including LG Electronics Vietnam Haiphong, LG Innotek Vietnam Haiphong, and LG Display Vietnam Haiphong, all of which are located in Trang Due Industrial Park, Hai Phong. LG Electronics Vietnam Haiphong has a scale of 40 hectares with a total investment capital of 1.5 billion USD. This factory produces electronic equipment such as TVs, air conditioners, vacuum cleaners, washing machines, refrigerators, smartphones, etc. LG reported that the total revenue of three factories in Hai Phong achieved in 2020 is equivalent to 8.39 billion USD.
Although LG decided to withdraw from the smartphone market, the LG factory in Hai Phong that specialized in manufacturing smartphones would still be active. The factory would be restructured to focus on producing a wider range of products that are in high demand worldwide. LG’s Vietnam manufacturing plant should see strong growth in the future if all goes according to plan.
Other EMS companies that are highly evaluated globally have also been shifting their factories to Vietnam over the past years. Jabil, Flextronics, and Wistron are a few notable names. Especially, Pegatron Corporation invested one billion USD in Vietnam in 2020 and started the construction of their first factory in Hai Phong.
Compiled by VietnamCredit