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Positive performance for foreign-invested electronic manufacturers in Vietnam
The increase in revenue and profit from exports of mobile phones and components is the basis for the continuous expansion of foreign-invested manufacturers in Vietnam.
Vietnam's exports of phones and accessories hit over $4.4 billion in May, a remarkable increase of 50.6 per cent on-year, according to the General Statistics Office.
The figure brings the total export value of phones and accessories to a record of $22.5 billion in the first five months of the year, up 11.6 per cent compared to the same period of 2023.
The US remained the biggest importer of Vietnamese phones and components as of April 2024 with an export turnover of more than $3.8 billion, surging 21 per cent on-year.
It was followed by China with over $3.4 billion, up 21 per cent and South Korea with more than $1.1 billion, up 7.5 per cent.
According to market research firm Statista, Vietnam's mobile phone and spare parts market was projected to reach $4 billion this year, with a compound annual growth rate of 1.45 per cent from 2024 to 2028. In 2024 particularly, smartphone sales in the country are forecast to reach 21.4 million units.
Since the beginning of the year, several new phone models have been launched to positive reviews including the Samsung Galaxy S24 Series, Honor X9b 5G and Xiaomi Redmi 12 Series.
At Samsung, its four factories in Vietnam created a combined profit of $1.2 billion last quarter after losing $181 million in the fourth quarter of 2023, according to the finance statement of the first quarter published by Samsung in late April.
Samsung Thai Nguyen (SEVT), the Korean conglomerate’s best-performing plant in Vietnam, accounted for $707 million.
The two plants in Bac Ninh, Samsung Electronics Vietnam (SEV) and Samsung Display Vietnam (SDV), acquired $300 million and $123 million in revenue.
The revenue of Samsung Electronics Ho Chi Minh City CE Complex (SEHC) made $40.7 million.
These four branches’ contributions accounted for 23 per cent of their parent’s quarterly profit. Samsung's four branches in Vietnam contributed 33 per cent to the South Korean tech giant's $11.8 billion profit in 2023.
It is a strong recovery for Samsung when 2023 was a challenging year for Samsung as its global revenue decreased by nearly 15 per cent to $198.2 billion while its profit for the year was only a quarter of its 2022 profit.
Along with Samsung, LG is also trying to take market share in terms of electronic products.
"Despite the continued uncertainty and volatility of the market and external environment, we will increase the proportion of high-end products and focus our company's capabilities on improving our cost structure and enhancing operational efficiency to strengthen our business competitiveness as well as future business base and secure a stable profit structure," said Sung-Hyun Kim, CFO and executive vice president at LG Display.
In mid-May, two Vietnamese subsidiaries of South Korea’s LG Electronics posted a combined revenue of $7.95 billion in 2023, up 23.4 per cent on-year, according to the South Korean company's latest financial statements.
LG Innotek Vietnam Haiphong acquired revenue of $4.2 billion, up 32.6 per cent on-year, with a post-tax profit of $166.9 million, up 56.6 per cent. LG Electronics Vietnam Haiphong made a revenue of KRW5,133.3 billion, up 14.5 per cent on-year.
The total post-tax profits of the two major Vietnamese subsidiaries of LG reached $276.6 million, up 17.6 per cent on-year.
LG’s investment in the city has amounted to $8.24 billion so far. Starting with $1.5 billion in 2013, the investment included $7.24 billion conducted by LG itself, featuring LG Electronics, LG Display, LG Innotek, LG CNS, LG Chemical, and LG International; and $1 billion conducted by 50 of its affiliates. In the past two years, LG poured an additional $3 billion into Haiphong.
Baek Chan, general director of LG Electronics Vietnam Company said, “Haiphong is one of the fastest growing localities attracting foreign business investment. In Haiphong, LG Electronics is both developing existing areas and preparing a strategy to expand product lines such as dishwashers and ovens.”
The expansion of LG is confirmed by the commitment to expand the operation of its vendors in Haiphong.
Ko Tae Yeon, general director of Heesung Electronics Vietnam – a key vendor of LG said, “Our company is still in negotiations with partners for the expansion plans in the city. Expanding investment is inevitable in the context that many manufacturing bases are moving from China to Vietnam and the trend will continue. So, I think many opportunities will be here, and our company is still trying to expand them more. In the short term, we can commit to investing more in Haiphong.”
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