FDI projects foster development of electronics industry | Look At Vietnam

FDI projects foster development of electronics industry

May 26, 2012

Vietnam’s export turnover of electronics products is seen growing strongly in the coming time given an influx of new foreign-invested electronics projects being set up and operational ones scaling up production. The arrival of large-scale foreign-invested electronics projects promises strong development momentum for the local industry.
New projects on the way

Cell phones are produced at the factory of Samsung in Bac Ninh.

A source from the Haiphong Economic Zone Authority (HEZA) said a Japanese electronics manufacturer is working with HEZA on promoting a large-scale printer factory project in the city.
Though declining to reveal the name of the investor, the source informed the project worth over US$100 million is aimed at producing printers for export. The investor is finalizing necessary procedures and it is expected that HEZA will grant this investor an investment certificate in June or July.
Not only Haiphong, other localities also see many foreign electronics producers and cell phone makers coming to sound out opportunities or pouring additional capital into their operational projects, even in the current tough circumstances.
Most notably, Wintek Corporation, a Taiwanese producer of touch screens for Apple iPads and iPhones, has decided to revise up the investment capital in its Bac Giang-based factory from US$250 million to US$1.12 billion. The additional capital of US$870 million will be used to import more devices and production lines, as well as expand the workshop to boost production.
The factory of Wintek in Vietnam will supply touch panels, liquid crystal displays (LCD) and liquid crystal monitors (LCM). When stable production is achieved, the factory will export billions of dollars worth of products and generate jobs for over 10,000 workers.
Meanwhile, Nokia in late April officially launched its cell phone plant project in the Vietnam-Singapore Industrial Park (VSIP) in Bac Ninh Province. The project worth 200 million euros, or US$256 million, is expected to start operation in 2013, turning out 180,000 products per year and creating jobs for 10,000 people.
This decision was made a few months after Nokia shut up and scaled down several factories in Europe to cut costs. This marks a new step in Nokia’s strategy to turn Vietnam into a link in the global supply chain of the world’s leading cell phone maker.
A factory producing cell phones and electronics components invested by Japan’s Kyocera will get off the ground this June. The factory worth US$55 million in the first phase will be developed in Thang Long II Industrial Park in Hung Yen.
Although the first phase has yet to be kicked off, Kyocera has already planned to add US$195 million in the second phase to expand production of cell phones and others. The factory is expected to start service in August 2013.
Development momentum
In a short period of time, many electronics projects with hefty foreign direct investment (FDI) capital have come to Vietnam. This has raised expectations for the development of the local electronics industry and bigger contribution of export revenue since the investors of the aforesaid projects all aim at export and creating global supply chains.
Although the local economy is facing many troubles, Vietnam remains attractive to foreign investors thanks to the abundant manpower and the strategic position connecting China and Southwest Asia, said analysts. The fact that Nokia has decided to invest in Vietnam instead of the experienced Thailand, Malaysia or Indonesia shows that Vietnam is still an appealing investment destination.
According to several electronics enterprises, the electronics component factories in China and other Asian countries currently tend to shift their production to Vietnam. This is proven by the presence of the production facilities of the world’s leading electronics groups in Vietnam, such as Samsung of South Korea, Intel of the U.S., Panasonic, Canon and Fujitsu of Japan, and Foxconn of Taiwan.
Analysts noted these projects have been making great contributions to the development of Vietnam’s electronics industry. The factories of the world’s top electronics producers in Vietnam will attract satellite investors, and certainly boost export.
Previously, the export of cell phones and electronics components usually fetched US$300-400 million per month. However, since July last year, the export turnover of this commodity group has always stayed at US$1.3 billion a month, said the General Department of Customs.
This achievement is mostly attributed to the Samsung factory in Bac Ninh. The factory last year exported over US$6 billion worth of products, and an average US$1 billion per month this year.
The South Korean electronics group is expanding its factory by pouring an additional US$830 million, taking the total investment capital in the factory to US$1.5 billion. This will definitely bring in higher export revenue in the coming time.
Meanwhile, the project of Intel, though just in its first-phase operation, has contributed a hefty 50% to the total export turnover of the HCMC-based Saigon Hi-Tech Park in 2011.
SGT