Tech titan: Foxconn’s headquarters in Taipei. Taiwanese tech companies like Foxconn quadrupled their investments in Vietnam in 2023. — Reuters
HO CHI MINH CITY: More advanced manufacturing from Taiwan is expected to migrate to Vietnam over the coming decades.
The country, known as a prime destination for Taiwanese investment, has plenty of confidence to win contracts.
The shift in Taiwanese technology corporations’ investment patterns in Vietnam reflects broader geopolitical and economic trends.
Since 2007, Taiwanese firms like Foxconn and Compal initially approached Vietnam with cautious investments, often limited in scope.
However, the current US-China trade tensions, which began in 2017, significantly altered this trajectory.
As a result, many of the top Taiwanese electronics and technology corporations have increased their investments and expanded their operations in Vietnam. This expansion is not just about scaling up, but also about establishing a more resilient and diversified supply chain.
Companies like Foxconn, Pegatron, Wistron and others have played a crucial role in developing Vietnam’s northern regions into a significant technology production hub.
With the disruptions caused by the Covid-19 pandemic, many companies have reassessed their supply chains and diversified their sources to mitigate risks. This has led to a significant increase in the role of Vietnam in the global electronics and technology sectors.
The country has become a strategic location for many Taiwanese technology companies, often referred to as “eagles” due to their significant market presence and technological prowess.
The Planning and Investment Ministry reported that Taiwan in 2023 quadrupled its investment into Vietnam compared with 2022, reaching an impressive US$2.2bil.
According to economists from HSBC, to date, Taiwan is the fourth-largest investor in Vietnam, with nearly 3,200 projects and a total registered capital exceeding US$39.5bil.
Additionally, Taiwan has become Vietnam’s fifth-largest trading partner with current annual bilateral trade turnover reaching US$25bil.
In the first six months of 2024, there were 39 new Taiwanese-backed projects in electronics, garments and textiles and electrical equipment in Vietnam, with a total investment capital of US$513.37mil, equivalent to 49% of Taiwan’s total foreign direct investment (FDI) in the period.
It is clear that Taiwan’s strengths in technology make it integral to the supply chains of the future.
Taiwan is well known as a global leader in electronics and semiconductors, accounting for more than 70% of the market share for high-end chips.
Six companies from Taiwan make more than 80% of the world’s personal computers and 90% of its servers.
Meanwhile, Vietnam hosts a semiconductor industry which is anticipated to be valued at US$20bil to US$30bil by 2030, with ambitions to become a key player in the global semiconductor industry.
The country has started moving to realise that aspiration by issuing policies focusing on attracting high-quality FDI and training enhancement.
The country also has an abundant young, skilful workforce, strategic geography, growing consumption market, competitive operational costs and above all, a wide range of free-trade agreements with numerous countries.
In Asean, Vietnam has become the second-biggest recipient of overseas investment from Taiwan, after Singapore.
Recently, companies from Taiwan have been stepping up their investments in more advanced electronics.
Investments like these help Vietnam upskill its workforce, rise up the manufacturing value chain and attract other suppliers.
Vietnam is now familiar with Taiwanese giant names in electronics such as Foxconn, Pegatron, Qisda, Compal, Quanta and Wistron.
The country recently received an investment of US$250mil from Tripod Technology in Ba Ria-Vung Tau province.
With the pivotal shift from labour-intensive industries to skilled and knowledge-intensive sectors, Vietnam’s government is offering preferential policies in high-tech industries, aiming to attract more quality investments, promisingly bringing more benefits to foreign investors including Taiwan.
The most complex manufacturing operations – such as those producing the most advanced semiconductors – are likely to remain in Taiwan for the foreseeable future, given the degree of specialisation, intellectual property and capital expenditure required.
A growing cross-section of advanced manufacturing is expected to migrate to Asean and Vietnam over the coming decades as demand ratchets higher and regional supply chains become more and more advanced.
Vietnam itself has witnessed a strong and broadening economic recovery, which pinned the gross domestic product growth in the second quarter of 2024 at 6.9%, accelerating the growth in the first half of 2024 to 6.42%, the second highest in five years.
The result shows the possibility of Vietnam reaching year-end growth of 6.5%, likely becoming Asean’s fastest-growing economy. Those factors have increased Vietnam’s appeal in international investors’ eyes, including Taiwanese companies. — Viet Nam News/ANN
