ELECTRONIC COMPONENTS INDUSTRY OVERVIEW FIRST HEAR OF 2023 – SIGNIFICANT DECREASE YOY?
The electronic components industry is currently the most important manufacturing industry in the economy. Currently accounting for about 18% of the entire industry and plays an important role in industrial production and export.
I. Overview of Vietnam’s electronic components industry in the first 6 months of 2023
1. Overview of the electronic components industry
According to the data of the Ministry of Industry and Trade, in the first 6 months of 2023, the production index of the electronic components industry decreased by 5.8% compared to the same period in 2022. The reason is attributed to the sharp decrease in the number of new orders, which is the cause of concern in Vietnam’s manufacturing industry. Many businesses have responded by shrinking in terms of output, employment and purchasing activities.
According to the general report, export turnover was estimated at 164.45 billion USD, down 12.1% over the same period last year. Phones, components and computers are the two largest export sectors of the country. However, both industries have faced an unprecedented decline in orders from the fourth quarter of 2022 to the first half of 2023. Therefore, the turnover that these two electronic components industries contributed in the first half of the new year is only at $49.5 billion.
Explaining the reasons for the decrease in export turnover of electronic components industry,
The Ministry of Industry and Trade said that because inflation is still high, monetary policy has not been loosened. The slow recovery of the world economy and the collapse of some banks in the world have had certain impacts on the trend of tightening spending, buying common and luxury products. Especially in some major consuming markets for items such as textiles and garments, footwear, furniture, and electronic components (such as the US and EU), import demand decreased.
2. Specific types in the electronic components industry
Cell phones and accessories:
Exports of phones and components in May 2023 reached x billion USD, down 24.2% compared to the previous month, bringing the export value of this product group in 5 months of 2023 to x billion USD, down 19.9%, corresponding to a decrease of 5 billion USD over the same period last year.
In the first 5 months of 2023, Vietnam’s exports of this group of goods to key markets such as China total x billion USD, down 15.4%; exports to the US x billion USD, down 34.3%; to the EU (27 countries) was x billion USD, up 9.7% and Korea x billion USD, down 46.9%, … over the same period last year.
Computers electronic products & components:
Export of this commodity group in May 2023 was x billion USD, up 12.1%. In general, the export value of this commodity group in the first five months of 2023 is x billion USD, down 9%, correspondingly down 2.03 billion USD over the same period last year.
In 5 months of 2023, the export of this group of goods to the US reached x billion USD, up 2.8%; to China reached x billion USD, down slightly by 0.8%; EU (27 countries) reached x billion USD, down 30.7%; Korea reached x billion USD, up 22.3%… over the same period in 2022.
Besides, other categories in the industry:
Production of capacitors of all kinds in Vietnam in 2Q/23 reached x million units, down 36% compared to the same period in 2022.
The production of resistors and camera tubes in the second quarter of 2023 also experienced a decline over the same period, decreasing by: -36.1% and -15.4%, respectively.
Besides:
Integrated circuit production output in the first 2 quarters of 2023 decreased by 26.9% compared to the same period in 2022.
Total output of semiconductor devices, light-emitting diodes produced in 2Q/23 is x billion units, down 37.3% svck 2022. In terms of electronic components industry, light-emitting diodes are the components with the largest production volume.
II. REMOVING DIFFERENTS IN THE SHORT-TERM – CONCENTRATION ON POTENTIAL DEVELOPMENT OF ELECTRONIC COMPONENTS INDUSTRY IN THE MEDIUM AND LONG-TERM
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Short-term forecast
With less optimistic forecasts about the global consumption of electronic components in 2023, the electronic components industry is expected to decelerate this year as orders decrease, at least until Q3/2023. The decline stems from the economic downturn in the US, Vietnam’s largest export destination, followed by the EU region.
2. Potential for industry development in the medium and long term
However, in the medium and long term, Vietnam has been showing its potential to become a “stopping station”, a new production center of the world in the fields of electronics, technology, and high-value industries. Vietnam is converging a lot of potential factors from human resources to favorable geographical and natural conditions.
With the advantage of a young population, nearly 60% of the total population is in working age (17-60 years old). Therefore, creating an abundant labor source for the electronic components industry. The geographical position of our country is also favorable, there are many areas with fast and dynamic industrial development, especially for the electronics industry.
Currently, the State and ministries and branches are also having policies to invest and create conditions for innovation, research and development of the electronic components industry. Universities, scientific and technological research organizations, to engineering and technology enterprises in related fields are also actively involved in training human resources for the industry.
On that basis, Vietnam is on track to build a research and development team strong enough in both capacity and scale to create technological inventions. Thereby contributing to the development of the high value-added electronic component industry.
Besides, the phone and component manufacturing industry is still the “leading” in exporting electronic components. Because up to now, this field has attracted a huge amount of FDI into production. Samsung alone has accumulated capital in Vietnam reaching 18.2 billion USD. Samsung operates a total of 6 factories in Bac Ninh, Thai Nguyen and Ho Chi Minh City, a research and development (R&D) center in Hanoi and a sales entity.
In recent years, the electronics and phone manufacturing industry has had many opportunities to welcome the investment wave from large technology corporations to move to Vietnam. A series of large outsourcing partners of Apple and LG such as Foxconn, Luxshare, GoerTek, Compal all have factories located in Vietnam or move from China.
Thereby creating an increasingly large production and supply capacity, making Vietnam an important export address in the production chain of this industry on the global map.
However, Vietnam’s electronic components industry is considered by some experts to be developing unbalanced.
Currently, it is mainly relying on the phone manufacturing segment, of which 70% are Samsung and Apple, making this market share increase significantly. Export market, mainly exporting electronic components and phones, focusing on China and the US market. Imports are also “unbalanced” when up to 88% of phone components are being imported from the Chinese market.
Information on Vietnam’s electronic components industry is compiled from the “Report on Vietnam electronic components industry in Q1/2023” conducted by VIRAC. The report provides full information on the macroeconomics, trade supply and demand of the electronic components industry, relevant information and forecasts from the latest updated data.
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