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ELECTRONIC COMPONENTS INDUSTRY REPORT Q1/2020


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Content

Section Page Section Trang

Abbreviations 3 3.1. History of formation and development 44

Executive summary 4 3.2. Industry supply chain linkages 45

1. Business environment 6 3.3. Production technology 49

1.1. Macroeconomic situation 7 3.4. Input materials 51

1.2. Legal framework 9 3.5. Production 53

1.3. Trade agreements 14 3.6. Consumption 61

2. Global electronic components market 22 3.7. Import - export 64

2.1. Definition and classification 23 3.8. Business activities analysis by location 73

2.2. Production process 24 4. Industry risks 78

2.3. Production network model in the industry 25 5. Planning 82

2.4. Manufacturing methods of electronic components 26 6. Prospects and forecasts 86

2.5. Production and Consumption 27 6.1. Industry driving forces 86

2.6. Import - export 33 6.2. Forecasts 90

2.7. Electronic components prices 35 7. Enterprise analysis 92

2.8. Production and Consumption in key countries 36 7.1. Enterprise introduction 93

2.9. Leading enterprises in the industry 42 7.2. Enterprise analysis 96

3. Vietnam’s electronic components market 43 8. Appendix of financial statements 103


3

Abbreviations

CIEM Central Institute for Economic Management SMT Surface Mount Technology

DBS Development bank of Singapore SMD Surface-mount device

FIA Foreign Investment Agency MNCs Multinational Corporations

FTA Free Trade Agreement GSO General Statistics Office

JEITAJapan Electronic Information Technology

AssociationGDVC General Department of Vietnam Customs

JETRO Japan External Trade Organization Co., Ltd Limited Liability Company

MFN Most favored nation CPTPPComprehensive and Progressive Agreement for Trans-Pacific

Partnership

SBV State Bank of Vietnam VEIA Vietnam Electronic Industries Association

SIA Semiconductor Industry Association WTO World Trade Organization

SIDECSupporting Industry Enterprise Development

CentreWTST World Semiconductor Trade Statistics

IP Intellectual Property NBS National Bureau of Statistics of China


4

Executive summary

Global electronics industry

growth rate (2019)-x%

Global semiconductor market

revenue (2019)xxx billion USD

Global production value of

electronic components (2019)x,xxx billion USD

Global electronic

components import value

(2018)

x,xxx billion USD

Top 3 electronic

components importers

(2018)

Top 3 products with the

largest revenue in the

semiconductor market

(2019)

• Global production value of Electronic components in 2019 is estimated to be x,xxx million USD, decreasing by x% compared to 2018.

• As of the end of September 2019, world electronic components price index reached xx, decreasing by x% compared to the peak in October 2018.


5

Executive summary

Consumption value of

Electronic components

(2019)

xxx,xxx billion VND

Import and export value

of phones and

components of Vietnam

(2019)

Export: xx billion USD

Import: xx billion USD

Production value of

Electronic components in

Vietnam (2019)

xxx,xxx billion VND

Import-export value of

computers, electronic

products and

components of Vietnam

(2019)

Export: xx billion USD

Import: xx billion USD

Top 3 Vietnam’s phones

and components import

market (2019)

Top 3 Vietnam’s phones

and components export

market (2019)

• The industrial production value of Electronic components in 2019 is estimated to be about xxx,xxx billion VND, increasing by xx% compared to

2018

• According to the latest forecast of Vietnam Electronic Industries Association, Vietnam’s electronic products consumption will increase by xx% in

2020.


1. BUSINESS ENVIRONMENT


1. Business environment

1.1 Macroeconomic situation

• GDP in 2019 achieved impressive results with the growth rate of x%

exceeding the goal set by the National Assembly from x% - x%.

• Production index of the whole industry is estimated to increase by

x%, exceeding the set target for the whole industry at the beginning

of the year

7

Source: VIRAC, GSOSource: VIRAC, GSO

%

Source: VIRAC, SBV

Production index of processing and manufacturing industry, 2012 - 2019

%

GDP growth rate by quarter, 2016 – 2019

VND/USD, 1/2013 – 12/2019

Content is deleted for demo purposeSource: VIRAC, GSO

Million VND per worker

• Labor productivity of Vietnam in recent years has improved significantly

and increased steadily over the years.

• In 2019, total newly registered capital, adjusted capital and capital

contributed to purchase shares of foreign investors reached xx billion

USD, increasing by x% compared to the same period in 2018.


1.1 Macroeconomic situation

8

Source: VIRAC, GDVC

The proportion of import-export value of Electronics, Computers,

Phones of all kinds and Components, 2010 – 2019

Vietnam’s labor productivity, 2011 – 2019Attracting FDI by sector, 2019

Source: VIRAC, FIA



1.2 Legal framework

9

1.2.1. Tax policy

Import – export duties

• The Ministry of Finance issued Circular No. 164/2015/TT-BTC

• According to the Preferential Import Tariff issued together with the Circular No. 164/2013/TT-BTC dated November 15, 2013 of the Ministry of Finance

and Decree No. 108/2006/ND-CD

• According to the Law on Export Duties, Import Duties and Decree No. 87/2010/ND-CP on August 13, 2010

Value added tax

• Decree No. 111/2015/ND-CP on development of supporting industry

• Circular No. 219/2013/TT-BTC dated December 31, 2013


10

1.2.1. Tax policy

Corporate income tax

• The Ministry of Finance just issued Circular No. 21/2016

• According to Decree 12/2015/ND-CP issued on February 12, 2015

• Decision No. 53/2004/QD-TTg

1.2.2 Labor policy

• According to Decision No. 1290/QD-TTg

• According to Decree No. 111/2015/ND-CP


1.2 Legal framework


11

1.2.3 Credit policy

• Circular No. 01/2016/TT-NHNN

• According to Circular 96/2011/TT-BTC dated 07/07/2011

• Official Document No. 9734/BCT-CNNg dated 20/10/2011

1.2.4 Land policy

• According to Notice No. 404/TB-VPCP about personal computer, on October 9, 2014

• According to Decision No. 49/2010/QD-TTg,


1.2 Legal framework


12


1.2 Legal framework

1.2.5 Technology policy

• On 4/5/2017, Prime Minister Nguyen Xuan Phuc issued Directive No. 16/CT-TTg

• Revolution 4.0 will eliminate unskilled labor, especially workers in the fields of agriculture and crafts. Vietnam is a country with many labor-intensive industries, so

the challenge is even more evident.


13


1.2 Legal framework

• According to Decree No. 111/2015/ND-CP on development of supporting industry

1.2.6. Environmental and food safety policy

1.2.7. Other general policies

• Decision No. 1556/QD-TTg dated October 17, 2012 of the Prime Minister

• Decision No. 12/2011/QD-TTg, on February 24, 2011


14

Integration process of Vietnam from 1995 to present

• By the end of 2019, Vietnam has signed, implemented, and is negotiating a total of xx agreements including the WTO agreement and xx free trade

agreements (FTA).


1.3 Trade agreements




15

1.3.1. WTO – Vietnam became the 150th member of WTO on 7/11/2006

Commitments

Regarding tariff, electrical and electronic equipment is one of the commodity groups with the most tariff reduction commitments in Vietnam's tariff

commitments under the WTO.

No. Criteria

MFN before

membership

(%)

Commitments to WTO

After

membership

(%)

Final (%)

Vietnam’s WTO commitments to cut import duties on electronic products




16

Impacts of WTO on Vietnam’s electronic components industry:

Positive impacts

Negative impacts




17

1.3.2 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

Commitments

• On tariff (trade in goods):

• Other commitments:

Positive impacts




18

Negative impacts

1.3.3. EVFTA

EVFTA was officially signed on June 30, 2019 after nearly 9 years of negotiations and coming to a conclusion.




19

1.3.4. Regional Comprehensive Economic Partnership - RCEP

• RCEP (Regional Comprehensive Economic Partnership) is considered one of the world's largest trade agreements

• Currently, Vietnam has signed many FTAs with the possibility of RCEP's approval, Vietnam’s Electronic components industry could seize the opportunity to

develop infrastructure and technology.




20

1.3.5. Vietnam - Eurasian Economic Union Free Trade Agreement

Some challenges still exist for Electronic Components industry when approaching the market of Eurasian Economic Union:

In order to optimize the advantages that Vietnam-EAEU FTA brings to Vietnam, Vietnamese enterprises need to proactively explore market information

and the needs of member countries in the union.




21

1.3.5. Other agreements

• Electronic components belong to the group of products that will be tariff-eliminated in some frameworks of the regional free trade agreements and

agreements with countries that Vietnam has signed and implemented in recent years.


22

2. GLOBAL ELECTRONIC COMPONENTS MARKET


23

2. Global Electronic components market

2.1. Definition and classification

Definition

Classification

• There are many ways to classify electronic components

List of some electronic components:


24


2.2. Production process

Process description

• The input materials are copper, steel, gold, aluminum components ... after being

checked for quality, they are put through the assembly stage (by hand and by

machine).

Source: VIRAC


25


2.3. Production network model in the industry

• Electronics industry is a high-tech industry that requires large capital investment, the speed of technological change is very fast,

• Due to the low labor cost as well as the location advantage in the local markets and the booming of the Internet, developing countries, including

Vietnam, have many opportunities to participate in the supply chain of electronic products in the global market.

Modern production network model in the electronics industry

• The association with high-tech FDI corporations is an

inevitable trend

Source: VIRAC


26


2.4 Manufacturing methods of electronic components

• Currently, there are methods in the world to produce electronic components such as PCBA, EMS, OEM, ODM in order of ascending complexity, the next method

will create higher added value than the previous one.

• The role of OEMs is changing, many OEMs in Europe tends to specialize in designing and marketing the end products.


27

• Global production value of Electronic components in 2019 is estimated to be x,xxx million USD, decreasing by x% compared to 2018.

• Production value of electronic components is forecast to reach x,xxx million USD in 2020, increasing by x% compared to 2019.


2.5 Production and Consumption

Source: VIRAC, JEITA

Million USDGlobal production value of Electronic components and devices, 2017 – 2020f


28

Global electronics industry growth rate by region, 2016 – 2018e

Source: VIRAC, Statista.com

• The electronics industry has a wide range of products like

• As of the end of 2018, Asia Pacific accounted for xx% of global

semiconductor market share

Source: VIRAC, WSTS



Global semiconductor revenue growth rate, 2010 - 2020f


29

Source: VIRAC, PwC

• Global revenue of electronic products in 2019 reached nearly xxx

billion USD, decreasing by xx% compared to 2018.

• Technology in semiconductor chips and devices production has

grown rapidly in recent years.

Global semiconductor revenue, 2012 - 2019

Source: VIRAC, Statista.com

Billion USD



Semiconductor revenue by product, 2019e

Billion USD


30

Source: VIRAC, Statista

Million units

Tablet vendor market share worldwide,

2018 – 2019

Source: VIRAC, IDC, Vendor

Sales of electronic products such as tablets, personal computers, and

smartphones will directly affect the development of electronic components

and accessories. This is the driving force for electronic components industry to

continue developing in the future.



Global tablet sales, Q1/2016 - Q4/2019


31

Million units %

PC vendor market share worldwide, 2019

Source: VIRAC, IDC

Global PC sales, 2018 – 2019

Source: VIRAC, IDC

• According to both IDC and Gartner statistics on global personal computer

market, sales in 2019 reached xxx million units, increasing slightly by x%

compared to the same period in 2018.



-10.00%

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

0

10

20

30

40

50

60


32

Global smartphone sales, 2018 – 2019

Source: VIRAC, IDC

Million units

Source: VIRAC, IDC

Smartphone vendor market share worldwide,

2018 - 2019

• According to IDC statistics, global smartphone sales in 2019 reached

x,xxx million units, decreasing by x% compared to x,xxx million units

of the same period in 2018.



-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

0

50

100

150

200

250

300

350

400

450

500


33


2.6 Import - export

Source: VIRAC, UncomtradeSource: VIRAC, Uncomtrade

Billion USD

Global import demand for Electronic components continued to increase in the period of 2010-2014, but the growth rate in 2015 decreased by x% due to the

impact of the world economic recession on consumers’ demand for output of Electronic components such as phones, computers.

Global electronic components import value, 2012 - 2018eKey HS imports market share, 2012 - 2018


34

HS code Item name

Source: VIRAC, Uncomtrade

• China has always been the leading country in electronic components import value,

accounting for xx% of the world’s total in 2018. In 2018, China's electronic

components import value was estimated at xxx billion USD, an increase of

xx% compared to the last year.

Electronic components import market by value, 2018


2.6 Import - export


35


2.7 Electronic components prices

Source: VIRAC


• As of the end of September 2019, world electronic components price

index reached xx, decreasing by x% compared to the peak in October

2018.

• The price of sensor devices tends to decrease continuously over the

years

Average prices of sensors and DRAM through the years,

2011 - 2018e

World electronic components price index, 1/2013 - 9/2019

USD/ equipment


36


2.8 Production and Consumption in key countries

• The world electronics market has long been dominated by developed industrial countries like the US, Japan and some EU countries. The latter countries have a lot

of difficulties in accessing and participating deeply in the market.

Semiconductor sales in major producers of the world, 2016 – 2020fBillion USD

Source: VIRAC, Semi.org

The U.S. Electronic components market


37


Trillion Yen

Japan’s electronic components production value, 2010 - 2019


Japan’s electronic components market

The production value of Japanese electronics and information technology

companies in 2019 is estimated at xx trillion yen, declining by x%

compared to 2018.



Japan’s device manufacturing in electronics and information

technology industry, 2019


38


Billion Yen


• In Japan’s electronics industry, active components (typically semiconductor devices), and passive components are mainly used for export as their

export value accounts for xx% of domestic production value.



Japan’s electronic components import - export, 2011- 2019 Japan’s electronic components import - export, 2019


39

Source: VIRAC, NBS

China’s semiconductor market size, 2010-2018

Billion USD

Source: VIRAC, NBS

China’s electronics industry revenue,

2012-2018Trillion CNYChina’s Electronic components market

With the great advancement of information technology, China is known

as one of the world's electrical factories.

0%

10%

20%

30%

40%

50%

60%

0

2

4

6

8

10

12

14




40

• Currently, China is increasing semiconductor manufacturing and manufacturing facilities’ capacity and buying more equipment, but most of the new

facilities are for Light-Emitting Diodes (LEDs) rather than integrated circuits (ICs).

• In recent years, China's electronics industry has continuously grown rapidly, leading to the strong development of the electronic components industry.

Billion CNY

Source: VIRAC, CCID



China’s integrated circuit production, 2010 - 2019


41

Korea’s Electronic components market

Korea's semiconductor industry is growing and is America's biggest competitor, whose revenue in 2019 reached xx billion USD, accounting for xx% of

total global market share.

Korea’s electronic components production and import-export value,

2016 – 2019e


Similar to China, Korea is also increasing the localization rate of

equipment production and minimizing the dependence on foreign

equipment.

Source: VIRAC, Dramexchange

2016 2017 2018 2019e Unit



-70.00%

-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Technology products revenue in Korea, 2019Billion KRW


42

List of 10 major semiconductor providers with largest revenue worldwide 2018-2019

Source: VIRAC, Gartner


2.9. Leading enterprises in the industry

According to Gartner, global revenue of semiconductor market reached over xxx billion USD in 2019, decreasing by xx% compared to 2018

Rank in 2019 Rank in 2018 ProducerRevenue in 2019

(million USD)

Market share in 2019

(%)

Revenue in 2018

(million USD)Growth (%)


43

3. VIETNAM’S ELECTRONIC COMPONENTS MARKET


• In 1975, after the reunification, Vietnam took over a number of electronics enterprises in the South.

• Starting in the 90s of the 20th century, the new industry officially entered the restructuring phase to go into development at the time Vietnam began

to open and integrate with the global economy.

44

3. Vietnam's Electronic components market

3.1. History of formation and development


45

• Vietnamese enterprises’ participation in the global value chain of the electronics industry is currently very limited and they only joined in assembling,

Electronics industry value chain

Source: VIRAC

• With a simple task like assembling,

Vietnam's labor productivity in electronic products

currently accounts for an average of only x-xx% of

product value.


3.2. Industry supply chain linkages - Vietnam's position in the global electronics supply chain


46

• The localization rate of electronics industry is currently very low, only about x-xx%. Specifically, the localization rate in electronics, information technology and

telecommunications only reached xx%, while in specialized electronics and high-tech industries only reached x%.

Source: VIRAC


3.2. Industry supply chain linkages - Localization rate of Vietnam’s electronics industry

The localization rate of Japanese electronics businesses in some countries, 2018


47

• Domestic electronics supporting enterprises have joined in the industry's value chain, however, most have provided only simple products with low value and

technology content.

• Currently, Vietnam mainly performs the stage of bringing the lowest added value in the value

chain of the global Electronics industry.


3.2. Industry supply chain linkages - Localization rate of Vietnam’s electronics industry

Samsung and Vietnam’s global value chain

Source: VIRAC


48

No. Issue Main rating criteria

List of MNCs’ requirements for component providers• According to modern production management standards, the

competitiveness of components and spare parts depends on three

basic factors: Quality - Cost - Delivery (QCD).

Source: VIRAC, SIDEC

• Reasons for the shortcomings of Vietnam’s electronic components

With these 8 criteria, not only enterprises with 100% Vietnamese capital but

many foreign direct investment enterprises (FDI) in Vietnam also affirm that it

is difficult to meet the standards.


3.2. Industry supply chain linkages - The reason Vietnamese enterprises are still outside the supply chain


49


3.3 Production technology

• Currently, surface-mount technology (SMT), also known as surface component welding, is the most commonly used technology in the production of

electronic components.

• In general, the process of pasting components on the board using SMT technology consists of 4 basic steps:


50

• In Vietnam, SMT technology only started in electronics industry since

2008.

• Vietnam's electronic components manufacturing enterprises currently

mainly use Japanese, Korean and Chinese technology and machines.


The origin of machines and technology used in Vietnam’s

component and spare part industry, 2016

Applying modern management standards and tools in

manufacturing components and spare parts in Vietnam, 2016



3.3 Production technology


51

• According to the Ministry of Industry and Trade's estimation, the

supporting industry currently depends on xx% of imported

materials, spare parts and components.

Weight

Component Iron (%)Aluminu

m (%)

Copper

(%)

Silver

(ppm)

Gold

(ppm)

Palladium

(ppm)

Value

Component Iron (%)Aluminu

m (%)

Copper

(%)

Silver

(ppm)

Gold

(ppm)

Palladium

(ppm)

•

The figures show that the linkage

among supporting industry enterprises is very poor; Therefore, it is difficult to

participate in the supply chain of foreign corporations.

Source: VIRAC


3.4 Input materials

Metal in electronic components


52

Prices of input materials (aluminum, copper, iron) for

electronic components, 2017 - 2019

Source: VIRAC, Worldbank

USD/mtUSD/dmtu

Prices of input materials (gold, silver, palladium) for electronic

components, 2017 - 2019

Source: VIRAC, Worldbank

USD/troy oz USD/troy oz

Vietnam is currently heavily dependent on imported electronic

components. Exchange rate and raw material price fluctuation will

directly affect the input costs for production and business activities of

enterprises.


3.4 Input materials

0

20

40

60

80

100

120

140

0

1000

2000

3000

4000

5000

6000

7000

8000

0

2

4

6

8

10

12

14

16

18

20

0

200

400

600

800

1000

1200

1400

1600


53


3.5 Production



Billion VND

Production value of Electronic components industry,

2011 – 2019e

Electronic components production by type, 2019

• Production value of Electronic components industry has grown

continuously at a CAGR of xx% in the period of 2011 – 2019.

• In 2019, electronic integrated circuit is the most manufactured

product


%

54

Source: VIRAC , GSO

Industrial production index of Electronic components industry by month, 2018 - 2019

(at constant prices of 2015)

• Vietnam's components manufacturing and supporting industry has not developed because this is a sector requiring large capital investment.

• According to a report of the Ministry of Industry and Trade, the industrial production index of Electronic components industry in 2019 fluctuated,


3.5 Production


55

Source: VIRAC, GSO

Component Unit 2011 2012 2013 2014 2015 2016 2017 2018 2019

Main electronic components production in Vietnam, 2010 – 2019

• Electronic components production has increased sharply with the presence of many large electronics corporations, Vietnam's electronics industry in

general and supporting industries for the electronics industry in particular will continue to draw many enterprises’ attention.


3.5 Production


56

Product Unit Produced in 2019

Change

compared to

2018 (%)

Source: VIRAC, GSO

Some types of computers, electronic products and components production by region, 2019


3.5 Production


57

Some types of Vietnamese computers, electronic products and components output in 2019 continued to grow


3.5 Production


58

• In 2018, the number of Electronic components enterprises reached x,xxx,

growing sharply at an average rate of xx%/year in the period of 2010-2018.

• Instead of being acquired, many Vietnamese enterprises did the opposite,

spending huge sum of money to own foreign businesses,

Source: VIRAC, GSO

Source: VIRAC, GSO

The number of enterprises and labors in the electronic

components industry, 2010 - 2018Enterprises Labors


3.5 Production

0

200

400

600

800

1000

1200

0

50,000

100,000

150,000

200,000

250,000

Categorized electronic components enterprises by region, 2017 - 2018


59

Source: VIRAC, GSO

Source: VIRAC, GSO

• The total average long-term investments and fixed assets of Vietnam’s

electronic components industry is constantly increasing at a CAGR of xx% in

the period of 2010 - 2018,

• Electronic components enterprises’ revenues are constantly growing over the

years

Billion VND

Trillion VND

Electronic components enterprises’ net revenue and

profit before tax, 2010 - 2018


3.5 Production

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Total fixed assets and average long-term investments, 2010 - 2018

-

2,000

4,000

6,000

8,000

10,000

12,000

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Billion VND


60

Enterprise Country Location

Investment

capital

(million USD)

Production capability/Field

List of FDI projects of the electronic components industry, 2014 – 2019

Source: VIRAC


3.5 Production


61

Source: VIRAC, GSO


3.6 Consumption

Billion VND

Source: VIRAC, FitchSolutions

Spending on mobile devices in Vietnam, 2017 – 2023f

• Consumption value of Electronic components industry has grown at a

CAGR of xx% in the period of 2012 – 2019.

Electronic components consumption value, 2012 - 2019

Million USD


62

Source: VIRAC, GSO

Computers and electronic products and components thereof

consumption by region, 7M/2019

Product Unit Produced in 7M/2019

Compared

to 7M2018

(%)


3.6 Consumption

Product Unit 2019

Growth

(Compared

to 2018)

Computers and electronic products and components thereof

consumption, 2019

Source: VIRAC, GSO


63

• Multinational corporations specializing in manufacturing electronic

products also have a very high demand for electronic components.


No. Component Material, Technology Units per month


Canon Vietnam’s demand for electronic components

Intel’s demand for component products

Direct

Indirect


3.6 Consumption


64


3.7 Import - export – Phones and parts thereof

Source: VIRAC, GDVC

• In 2019, Vietnam’s phones and parts thereof exports reached xx

billion USD, increasing by x% compared to the same period in 2018,

Vietnam’s phones and parts thereof exports by month, 2018-2019

Source: VIRAC, GDVC

Million USD

Vietnam’s phones and parts thereof export market, 2019


65

Vietnam’s mobile phone exports, 2019

Source: VIRAC, GDVC

Million USD• In 2019, Vietnam’s mobile phone export value reached xx billion USD,

increasing by x% compared to the same period in 2018.

• In 2019, total export value of Vietnam’s phones and parts thereof

reached over xx billion USD, increasing by x% compared to the same

period in 2018.

Source: VIRAC, GDVC



Mobile phone export market, 2019


66

Source: VIRAC, GDVC

Million USD

Vietnam’s phones and parts thereof imports continue the downward trend

from 2018. As of the end of 2019, Vietnam’s phones and parts thereof

imports reached over xx billion USD, decreasing by x% compared to the

same period and accounted for x% of total goods import value of the

whole country in 2019.

Source: VIRAC, GDVC

Phones and parts thereof supplying market for Vietnam, 2019



-0.50

0.00

0.50

1.00

1.50

2.00

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Phones and parts thereof import value, 2010 – 2019


67

Source: VIRAC, GDVC

No. Enterprise

Top 10 phones and parts thereof importing enterprises by value,

2019

No. Enterprise

Top 10 phones and parts thereof exporting enterprises by value,

2019

Source: VIRAC, GDVC




68


3.7 Import - export – Computers, electronic products and components thereof

• In 2019, computers and electronic components export value reached

over xx billion USD, increased by xx% compared to the same period

in 2018, and accounted for xx% of Vietnam’s total goods export

value in 2019.

Source: VIRAC, GDVC

Vietnam’s computers, electronic products and components

thereof export value, 2010 – 2019

Source: VIRAC, GDVC

Billion USD

Computers, electronic products and components thereof exports by group of

enterprises in Vietnam, 2019


69

• The export value of Vietnam’s computers, electronic products and components thereof to China in 2019 reached nearly x billion USD, increasing by

xx% compared to 2018.

Source: VIRAC, GDVC

Top 10 Vietnam’s computers, electronic products and components

thereof export market, 2019

Unit: Million USD

Top 10 exported products with the highest FDI rate, 2019

Source: VIRAC, GDVC




70

Source: VIRAC, GDVC

Billion USD

• Vietnam’s computers, electronic products and components thereof

import value has grown continuously at a CAGR of xx% in the period of

2011 – 2019.

Source: VIRAC, GDVC

Computers, electronic products and components thereof imports by group

of enterprises in Vietnam, 2019



Computers, electronic products and components thereof import

value, 2011 - 2019


71

Top 10 computers, electronic products and components thereof supplying market for Vietnam, 2019

Source: VIRAC, GDVC

The 10 major countries exporting computers, electronic products and components thereof to Vietnam market account for about xx% of the total export

value of this item group to Vietnam in 2019.

Unit: Million USD




72

Source: VIRAC, GDVC

Computers, electronic products and components thereof imports, 2019



TypeDecember 2019

(Million USD)

Compared to

Nov 2019 (%)

Compared to Dec

2018 (%)

2019

(Million USD)

Compared to

2018 (%)


73


3.8 Business activities analysis by location

Vietnam is becoming the world's electronics factory and foreign direct investment continues to pour in.

Hung Yen

• Electronic components industry in the province today is still at an early stage in the production chain of electronic products.


74

Bac Ninh

• Industrial scale increases year by year, specifically:

• Bac Ninh has xx concentrated industrial parks approved by the Prime Minister, of which xx zones have been put into operation,

• Along with the development of key industries, supporting industries are always the province’s interest,




75

Vinh Phuc

• Since 2014, electronic components production has surpassed textiles and tea, becoming the industry with the highest growth rate and always leading

the list of key export products of the province.




76

Hai Phong

• FDI inflows into Hai Phong have also increased rapidly in recent years, in 2018 the total foreign investment in Hai Phong was estimated to increase by xx%

compared to 2017,

No. Sector, occupation Location Scale/Capacity Capital (USD)

List of electronics industry projects calling for foreign direct investment (FDI) in Hai Phong city,

2018 - 2025

Source: VIRAC, Decision No. 2553/QD-UBND




77

Thai Nguyen

• After the Thai Nguyen factory of Samsung was put into operation, satellite investors also came to the province. Hundreds of millions of USD have been

invested by electronic component manufacturers in Thai Nguyen, most of these satellite components factories come from FDI inflows.




78

Raw materials risks

Occupational safety and health risks

4. Risks


79

Environmental risks

Policy risks

4. Risks


80

Competitive risks

Source: VIRAC, MOIT

Risks of increasing labor costs

4. Risks

Region

2019 Change

compared to

2018

(Million VND)

Compared to

2018 (%)

Million VND

Minimum wage by region in Vietnam from 1/1/2019


81

Strengths Weaknesses

Opportunities Threats

4. Risks


82

On January 18, 2017, the Prime Minister issued Decision No. 68/QD-TTg

• The program is implemented through 2 phases. To be precise:

On October 8, 2014, the Ministry of Industry and Trade issued Decision No. 9028/QD-BCT

5. Planning


83

• Specifically for the field of electrical and electronic spare parts and components:

On 07/01/2015, the Ministry of Industry and Trade issued Document No. 82/BCT-CNNg

5. Planning


84

According to Decision No. 880/QD – TTg

To 2020

5. Planning


85

To 2030

• In order to support organizations and individuals to improve their capacity in supporting industry development activities, the Ministry of Industry and

Trade is drafting the "Supporting industry development program for the 2016-2025 period".

5. Planning


6. Prospects and forecasts

6.1 Industry driving forces

86

From the general situation of electronic components industry in the world

The shift of electronic components industry from China to developing Asian countries

Demand for electronics is increasing worldwide

From Vietnam's economic integration with the world

Reduce import and export duties

Increasing FDI in the industry


87

Vietnam's transition towards the world’s manufacturing center

Increasing competition pressure

From the geographical location and population of Vietnam




88

From the Vietnamese Government

• Policy on developing supporting industry in general and Electronics industry in particular:

• Activities to support and expand investment and trade relations:

From the potential electronic consumer demand of the domestic market

✓ The electronics industry with the strong development of information

technology, communication and internet is thriving in the world.

Source: VIRAC, Fitch Solutions

Million USD



Some electronic devices consumption revenue,

2017 - 2023f


89

Source: VIRAC, GfK

Billion VND

Retail sales of domestic electronic technology products, 2019

Source: VIRAC, GfK

Trillion VND

Revenue and growth of electronics market in Vietnam,

Q1/2017 – Q4/2019

%• According to market research firm GfK, in 2019, Vietnam's electronics

market revenue reached xxx,xxx trillion VND, declining by x%

compared to the same period in 2018.

• By 2020, the consumption of electronics and refrigeration products in

Vietnam will increase to xx%



-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

0

20000

40000

60000

80000

100000

120000

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

0

10

20

30

40

50

60

70



6.2 Forecasts

90

Forecast of development of output industry - electronics industry:

• The electronics industry with the strong development of information technology, communication and internet is thriving in the world.

• In recent years, sales of electronic components have become stable.

Forecasts of demand in Electronic components industry:

No Product Demand in 2020




6.2 Forecasts

91

Impacts of Covid-19 on Vietnam’s Electronic components industry:

nCoV has quite a big impact on Vietnam’s Electronic components industry, to be precise:


92

7. ENTERPRISE ANALYSIS


No. Enterprise Business lineNet revenue

(Million VND)General information

93

7 Enterprise analysis

7.1. Enterprise introduction




94






95




96


7.2. Enterprise analysis

Source: VIRAC

Net revenues from sales and services rendered, 2017 - 2018Billion VND

0%

500%

1000%

1500%

2000%

2500%

3000%

3500%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

The enterprises analyzed all experienced revenue growth in 2018 compared to 2017, among which:


97

• At present, very few Vietnamese electronic components manufacturers

still have enough production conditions to participate in the supply

chains of large enterprises.

Revenue of Samsung Bac Ninh and Sam Sung Thai Nguyen,

2011 - 2018Trillion VND

Source: VIRAC




98

Billion VND

Source: VIRAC

Gross profit and gross profit ratio, 2017 - 2018

Gross profit ratio of enterprises in the group is quite low, ranging from x – xx%.

• The enterprises in the analyzed group all recorded growing gross profit ratio in 2018.

-5%

0%

5%

10%

15%

20%

(20,000)

0

20,000

40,000

60,000

80,000

100,000

120,000




99

Selling expenses and G&A expenses, 2018

• Despite the relatively high revenue, the selling expenses of the enterprises analyzed are quite low

• In general, the general administrative expenses of most enterprises in the group are relatively low, accounting for a major proportion of which is the

salary paid to foreign managerial staff.

Source: VIRAC




100

Billion VND

Source: VIRAC

Asset structure, 2018

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

• The asset structure of the enterprises analyzed is mostly current assets,

• Enterprises in the industry are still not proactive in domestic input materials,




101

Billion VND

Source: VIRAC

Source: VIRAC

Capital structure, 2018

Liquidity, 2018

0

1

1

2

2

3

3

4

4

5

5

0

50,000

100,000

150,000

200,000

250,000

300,000

• The capital structure of most enterprises in the group is liabilities

• All enterprises in the analyzed group have a much smaller quick liquidity

ratio compared to current liquidity ratio.




102

ROS ROA ROE

Profit

after tax

(billion

VND)

Net

revenue

(billion

VND)

Average

equity

(billion

VND)

Total

average

assets

(billion

VND)

• Average receivables of enterprises in the analyzed group

ranged from xx to xx (days).

Subsidiaries of large corporations have much higher profit

after tax than FDI enterprises that produce, process and

assemble by orders of multinational corporations.

Source: VIRAC

Source: VIRAC

Business performance, 2018

Asset efficiency ratio, 2018




103

8. APPENDIX OF FINANCIAL STATEMENTS


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS

I. Cash and cash equivalents

II. Short-term financial investments

III. Short-term receivables

1. Customer receivables

IV. Inventories

B. NON-CURRENT ASSETS

TOTAL ASSETS

A. LIABILITIES

I. Current liabilities

1. Short-term borrowings and debts

2. Taxes and other payables to government

budget

II. Non-current liabilities

1. Long-term borrowings and debts

B. OWNERS' EQUITY

TOTAL LIABILITIES AND OWNERS' EQUITY

INCOME STATEMENT

Unit: VND 2017 2018

Net revenues from sales and services rendered

Costs of goods sold

Gross profit from sales and services rendered

Financing income

Financial costs

Interest expenses

Selling expenses

General administrative expenses

Net profits from operating activities

Profit before tax

Current corporate income tax expenses

Deferred corporate income tax expenses

Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018

I. Cash flows from operating activities - -

Gains (losses) on investing activities

Interest expenses

Net cash flows from operating activities

II. Cash flows from investing activities

Expenditures on purchase and construction of fixed

assets and long-term assets

Net cash flows from investing activities

III. Cash flows from financing activities

Net cash flows from financing activities

Effect of exchange rate fluctuations

Net cash flows during the fiscal year

Samsung Electronics Vietnam Thai Nguyen Co., Ltd

104

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018

I. Cash flows from operating activities


Interest expenses



Expenditures on purchase and construction of fixed assets

and long-term assets






LG Electronics Vietnam Hai Phong Co., Ltd

105

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










Samsung Electro-Mechanics Vietnam Co., Ltd

106

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










Fuhong Precision Component Co., Ltd

107

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










LG Innotek Vietnam Hai Phong Co., Ltd

108

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










Funing Precision Component Co., Ltd

109

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










Intel Products Vietnam Co., Ltd

110

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










Bhflex Vina Co., Ltd

111

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










Mcnex Vina Co., Ltd

112

VIII. Appendix


BALANCE STATEMENT

Unit: VND 2017 2018

A. CURRENT ASSETS





IV. Inventories


TOTAL ASSETS

A. LIABILITIES




budget



B. OWNERS' EQUITY


INCOME STATEMENT

Unit: VND 2017 2018


Costs of goods sold


Financing income

Financial costs

Interest expenses

Selling expenses



Profit before tax



Profit after tax

CASH FLOW STATEMENT

Unit: VND 2017 2018



Interest expenses










Power logics Vina Co., Ltd

113

VIII. Appendix


REPORT DISCLAIMER

This document has been prepared in good faith on the basis of information available at the date of publication without any independent verification. VIRAC has

produced this report for private circulation to professional clients only. All information and statistical data herein have been obtained from sources we believe to

be reliable and made to ensure the accuracy of the contents of the pages of the report at the time of preparation. Such information has not been independently

verified and VIRAC makes no representation or warranty, whether express or implied, of any kind with respect to the document and its contents, information and

materials. The content found in this report is proprietary to VIRAC and is provided solely for your personal and non-commercial use. You agree that you will not

use this report for any purpose that is unlawful and that you will not reproduce the report or redistribute it outside your organization, or place it on a website for

public access without the express written permission of VIRAC.

SHOULD YOU NEED ANY ASSISTANCE, PLEASE CONTACT US:

VIETNAM INDUSTRY RESEARCH AND CONSULTANT (VIRAC JSC.,)

6th Floor, Anh Minh Building, 36 Hoang Cau, O Cho Dua, Dong Da, Hanoi, Vietnam

Website: http://virac.com.vn/

Email: [email protected] | Tel: +84 463289520

115

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