Vietnam’s Electronics Sector: A Transformative Shift in Exports

Overview of FDI in Vietnam’s Manufacturing Sector

Vietnam is undergoing a remarkable transformation in its manufacturing landscape, particularly evident from the findings of a recent report by Savills Vietnam, titled “Industrial Real Estate Spotlight 2025: A Shift Toward Growth.” This report highlights that foreign direct investment (FDI) in Vietnam’s manufacturing sector reached approximately $18.22 billion in the first ten months of 2025, amounting to nearly 60% of total FDI inflows, which totaled around $31.52 billion.

Leading Provinces in Manufacturing FDI

Bac Ninh has emerged as the frontrunner in newly registered manufacturing FDI, contributing approximately 13.8% of the country’s total investment. Hot on its heels are Hai Phong at 10.5%, Dong Nai with 9.8%, and Hung Yen at 7%. This concentration of investment across these provinces reflects their strategic significance in Vietnam’s manufacturing ecosystem.

Major Investors and Their Contributions

When considering the countries investing in Vietnam’s manufacturing, China stands out, having initiated 406 new manufacturing projects valued at around $2.6 billion, making up 33% of the total projects during this period. Singapore follows with 178 projects valued at $1.7 billion, while Hong Kong ranks third with 199 new projects, reflecting a diverse range of international investment.

Sector Breakdown of Manufacturing FDI

Delving into industry specifics, the electronics sector has emerged as a powerhouse, attracting $1.5 billion through 148 projects. This is followed by metal fabrication, which secured $1.2 billion across 181 projects. Notably, the electrical equipment sector brought in $730 million through 87 projects, while rubber and plastics garnered $663 million from 179 projects. This clear trend indicates a pivot toward high-value industries.

Insights from Industry Experts

John Michael Campbell, Head of Industrial Services at Savills Vietnam, emphasizes that the shift towards these sectors is significant; manufacturing and processing alone are contributing nearly 60% to newly registered FDI capital. This trend indicates a robust move towards high-value industries like electronics, advanced machinery, and semiconductors, highlighting Vietnam’s evolving role in the global supply chain.

Infrastructure Development’s Role

A critical element in attracting such investments is the advancement in infrastructure. Campbell points to major expansions at the Cai Mep–Thi Vai port cluster and various inter-regional expressways, significantly enhancing logistics efficiency. This strategic improvement makes Vietnam increasingly attractive to industries with complex and demanding supply chains.

The Shift in Vietnam’s Export Landscape

Historically, Vietnam’s export profile was dominated by light manufacturing items such as garments and footwear. In 2013, these categories made up about 60% of exports to the US, with electronics merely comprising 13%. However, the recent years have seen a drastic shift. Electronics exports have surged, reaching parity with light industrial goods by 2024, and officially surpassing them in early 2025 to become Vietnam’s leading export category to the US.

The Impact of Trade Dynamics

This transformation can largely be attributed to Vietnam’s strategic positioning during the US-China trade tensions. As companies began reconsidering their supply chains, Vietnam has adeptly positioned itself as a critical hub for final electronics assembly, particularly in consumer electronics.

The Role of Major Corporations

A significant driver of this change has been Samsung’s early investment in Vietnam, beginning in 2007. Today, the country plays a vital role in Samsung’s global operations, contributing to about 50% of its worldwide smartphone output. Although Vietnam has yet to eclipse China in production, its share in smartphone-related exports has grown remarkably from minimal levels to substantial figures over the past 15 years.

Advances in Semiconductor Manufacturing

Beyond consumer electronics, Vietnam’s foray into semiconductor manufacturing has gained attention. Investments from companies like Intel have positioned Vietnam as a notable player in integrated circuit (IC) production, emphasizing the country’s ability to not only assemble but also innovate in high-value manufacturing.

Current Trends and Future Prospects

While FDI inflows into manufacturing may have dipped compared to their peak last year, they now align with pre-pandemic levels, showcasing resilience. Capital investments from China and the US have notably surged, signaling a renewed confidence in Vietnam’s industrial potential.

Looking Ahead: A Changing Manufacturing Paradigm

As we look to 2026, Campbell predicts that it will be a key year for Vietnam’s industrial market, with expectations for improved production prospects and a stable investment environment. The focus is shifting from a cost-driven growth model to one that prioritizes system capacity, ensuring that infrastructure, energy, and data services synergize effectively to meet the demands of advanced manufacturing.

Vietnam’s FDI Journey Since 1987

Vietnam’s journey with foreign direct investment has been monumental, having attracted over $526 billion in FDI since the inception of its Foreign Investment Law in December 1987. South Korea remains the largest investor, accounting for $94 billion, or 17.8%, of all FDI in Vietnam, followed closely by Singapore, Japan, and Taiwan.

Conclusion

Vietnam stands at a pivotal crossroads in its manufacturing evolution, with a clear emphasis on technology-driven industries and a growing capacity to meet global demands. The coming years will be crucial in shaping Vietnam’s role in the global manufacturing ecosystem.