New Base for Smartphone OEMs - Vietnam is becoming another Factory of the World

Monday, October 12, 2015

In the early time, a report from Tagesspiegel said that Foxconn from Taiwan, Samsung from Korea and even the US chipmaker Intel have built up their factories in Vietnam. And Samsung has invested three billion dollars in a second cell phone factory and wants to cut back the smart phone production in China. Now this South Korean phone manufacturer is already making more than half of its smartphone in Vietnam, which becomes a more and more popular factory of the world for its stable economy, good education and especially the cheap salary.

Vietnam Smartphone Factory

According to Tagesspiegel’s report, analysts have already talked about the third wave of manufacturing industry migration: in the 70s of last century, labor-intensive manufacturing industry was shifted from Japan to Singapore, Taiwan and South Korea, then to China Mainland in 90s. Now it transferred to South and Southeast Asia countries such as Thailand, Bangladesh, India, Cambodia and Vietnam.

Besides the manufacturing industry migration make Vietnam have more opportunities to be the factory of the world, there is another factor. Vietnam is one of the countries that are negotiating with United States for Trans Pacific Free Trade Agreement (TPP), but China is not in the list. This will bring more investors from China to Vietnam, especially the smartphone OEMs business. After all, mobile phone OEM industry would always be the first to find cheaper locations and labors before other businesses.

However, just like India won’t take place China’s position of the worlds’ factory, Vietnam neither will. China has more advanced smart phone manufacturing technology and more skilled workers after years’ development and a higher phone production capacity accordingly. According to a McKinsey study in 2012, a Chinese worker produced about 15 times as much as a Vietnamese per year. The smart phone manufacturers need to invest heavily in workers’ education and training. China is still the main smart phone factory and manufacturing more than 40 percent of world’s smartphone. 

OEM industry , Vietname , smartphone , China