16 floors of high-tech research: In Vietnam’s capital Hanoi, a symbol for the reorganization of the global technology supply chain is being created. South Korea’s largest group, Samsung, is now expanding its largest production site for smartphones into an innovation center. In its new building, the group wants to develop software for its mobile phones and technology for mobile networks on an area of almost 12,000 square meters.
For Samsung and Vietnam, this research center is an important step in the transformation of the socialist republic into an alternative to its large neighbor China. More than 50 percent of Samsung’s smartphones currently come from Vietnam. For other companies, however, the Middle Kingdom still dominates the global production of high-tech. But the more the technology war between the USA and China escalates, the more companies are looking for other production sites.
One example is Samsung’s arch-rival Apple. The Californian group currently produces more than 90 percent of its products in China. The situation is only becoming increasingly precarious with the growing pressure from the US government to slow down China’s technological development and the corona-related problems with production there.
Peter Zeihan, a provocative American geostrategist who has been predicting an end to hyperglobalization for over a decade, warns that the iPhone maker is now facing production problems. Apple is the most dependent on China technology group, says Zeihan. The relocation of factories began five years ago, when US President Donald Trump was in office, and accelerated two years ago with the pandemic. Only not at Apple: “With every warning sign, they have doubled, tripled, even quadrupled their commitment to a China-centric supply chain.”
Japan has always tried everything possible with electronics – and often the impossible. Every Thursday our author Martin Kölling reports on the latest trends from Japan and neighboring countries.
Helpful government in Vietnam
Now Apple is also changing direction and expanding its production in Vietnam and India. US bank JPMorgan predicts that China’s share of Apple’s production will fall from 95 percent to 75 percent by 2025. Vietnam is already a popular choice when looking for alternatives, lured by lower wages, Vietnam’s participation in many free trade agreements and a supportive government.
One of the pioneers is the technology group Samsung, which has been systematically cultivating the field for decades. The group then crawled further and further up the technological value chain via household appliances and televisions. Meanwhile, the Koreans have invested $20 billion in factories, becoming the largest foreign investor.
It’s complicated: China and South Korea
Around 160,000 jobs depend directly or indirectly on Samsung’s national subsidiary, which had sales of $74 billion in 2021. On the other hand, the Koreans reduced their involvement in China, especially after China punished South Korea economically after deploying a missile defense system against North Korean missiles. And that’s not the end of Vietnam’s rise in the global high-tech supply chain.
The world market leader in memory chips is now investing a further 3.3 billion dollars in part of the semiconductor production. It is a ball grid array factory, a form of packaging for integrated circuits. At the same time, Samsung is reorganizing its smartphone production so as not to become too dependent on China’s neighbors. In 2021, the group even set up a new production line for mobile phones in its home country, strengthened the location in India and added plants in Indonesia and Brazil. However, the growing involvement of other global corporations will continue to support Vietnam’s rise.
(jle)
