Electronics industry put at disadvantage due to falling demand

According to a report released by the Ministry of Industry and Trade (MoIT) on industrial and commercial production, the production index of electronics and computers during the last six months underwent a surge of 9.8% over the same period from last year, coming in higher than the increased level recorded during the same period last year at 3.5%.

Despite facing plenty of difficulties when attempting to import components from China at the beginning of the year, the reasonable balance of production and business activities has led to the local electronics industry enjoying strong growth in terms of industrial production index and export turnover throughout the reviewed period.

The electronics industry is forecast to continue being hit by the impact of the novel coronavirus (COVID-19) epidemic in the second half of the year (Photo:CafeF)

Most notably, the first half of the year saw the export value of computers, electronic products and components increase by 24.2% to US$19.28 billion, whilst mobile phones and accessories witnessed a fall of 8.4% to US$21.5 billion.

With positive indicators of growth in production and exports, the MoIT continues to foresee a difficult situation for the domestic electronics industry ahead in the second half of the year as a result of the downturn caused by the global COVID-19 pandemic situation which will reduce the demand for electronic products in the US and European markets.

This can be seen as Samsung's global sales and output are forecast to endure a decline as a result of the general impact of the epidemic on the electronics industry as a whole. Indeed, Samsung Vietnam is also set to scale down its export target for the year to approximately US$45.5 billion in comparison with the 2019 level of US$51.38 billion.

The MoIT believes that the nation’s handling of the virus is greatly appreciated by the international community, acting as important motivation to attract greater foreign investment into the country post-COVID-19.

Elsewhere, transnational groups are considering making moves to shift their investments, presenting a great opportunity for the nation to attract this impending wave of capital. This also shows that major technology conglomerates remain poised to move their production chains to the nation, as can be seen by LG moving its entire production line from the Republic of Korea to Hai Phong.

According to Nikkei, the second quarter of the year will see Apple produce up to four million AirPods locally, equivalent to roughly one thirds of the total AirPods produced worldwide. Foxcon, a component supplier for Apple, has located its factory in Bac Giang whilst Panasonic Vietnam is also preparing to gradually move its production line from Thailand in order to produce refrigerators and washing machines at the beginning of September.

Enacting these activities is expected to serve as a driving force for the electronics industry to enjoy stronger growth in the near future.