Vietnam Soars in Global Supply Chains on Favourable Conditions

Vietnamese electronics manufacturing services (EMS) market will grow at a CAGR of 5% between 2020 and 2026. According to Vietnam’s General Statistics Office, the country’s consumer electronics sector recorded its highest ever production at 369.6 million units in October 2020, followed by the electronic components sector at 325.7 million units.

Given the exponential growth in its manufacturing sector along with growing domestic demand and exports, primarily in electronics and automobiles, the EMS business is projected to scale new heights in the country. Many global OEMs and EMS providers like Samsung, LG and Foxconn (Apple’s contract manufacturer) are investing in the production of printed circuit boards, camera modules, printers, servers, phones, networking equipment, televisions and other electronics equipment in the country.

Samsung, which in 2020 held almost 70% of the handset market share in Vietnam, is also one of the largest FDI players in the country. Vietnam has one of Samsung’s largest smartphone production bases outside South Korea. By 2022, Samsung is also projected to complete its $220-million research and development centre in Vietnam.

Counterpoint Research Vietnam Handset OEMs Production Shipment Share, 2020

Investment climate in Vietnam

Despite the setback caused by COVID-19, Vietnam is one of the few countries in Asia that managed to record a positive GDP growth in 2020.

The constant improvement in investment and business policies, participation in bilateral and multilateral free trade agreements, increased FDI and geographical proximity to China have all been active factors in making Vietnam a favourable destination for manufacturers.

Pegatron has pegged almost $1 billion worth of investment in its Vietnamese plant that will be rolled out in three phases, targeting investments in computing, communication and consumer electronics facilities, by 2027.

Foxconn is also moving some parts of its iPad and MacBook assemblies to Vietnam from China against the backdrop of rising US-China tensions, thus seeking to derisk its production. It has also been awarded a licence to build a $270-million plant to produce laptops and tablets in Vietnam.

Google too is moving production of its smartphone brand Pixel for the US market to Vietnam. It is also likely that the company may end up moving its hardware production to Vietnam. Similar plans are underway at companies like Samsung, itel and Microsoft.

Xiaomi too is aiming to take advantage of cheap labour and other favourable market conditions in Vietnam. Most recently, the company opened its first phone assembly factory in Vietnam.

Counterpoint Research Vietnam Top Export Regions by Shipment Share, 2020

Successful absorption from China

Like China, Vietnam is known for its comprehensive and mostly five- to ten-year strategies, like ‘Made in Vietnam 2025: Industrial Policy and Strategy 2025’ and Vision for 2035. These policies have not only helped in changing Vietnam’s growth story which started 30 years ago but have also facilitated absorption of industry from China, including the shifts triggered by trade wars.

Its unprecedented pursuit for business-friendly policies, liberalisation of its economy, low wages, favourable demographics and successful pushing of its infrastructural capacities are all catalysts in making Vietnam a suitable ‘China Plus One’ destination in the global supply chain. As economies around the world look to derisk the heavily integrated supply chain ecosystem in the post-COVID-19 era, along with a heated US-China trade war, foreign investors like Google, Microsoft and Samsung feel better diversifying their risks.

Government strategy for future development

The Vietnamese government aims to have over 10 strategic locations in the IT segment by 2025 with revenues of more than $1 billion. Under its IT and Made in Vietnam programs, it aims to have over 100,000 tech firms to make Vietnam among top 30 countries in IT development in the coming years.

Vietnam’s growing capacity under the ‘China Plus One’ policy reflects the following trends:

  • With its 2025 vison, Vietnam aims to target fields with high value-addition and export potential.
  • The electronic equipment and automobile sectors, along with other industries like textile, seem to be gaining a lot of traction.
  • Vietnam wants to develop its supporting industries, especially mechanical goods, chemicals and telecommunications, to significantly leverage its position in the global supply chain.
  • The aim is to develop priority industries in key economic zones and coastal zones along with processing industries and supporting industries.
  • Vietnam is also aiming to get FDI from companies that could transfer technology and capacity to local industries and talent.


With Vietnam’s recent ascension to the ranks of the global supply chain hubs, it is easy to overlook the fact that Vietnam is still expanding and growing its infrastructure. With more companies moving their operations to Vietnam, the leasing demand in Vietnam’s industrial zones is soaring.

However, Vietnam’s growing competitiveness, market reforms, and steady progress in ease of doing business (evident in its higher scores in the World Economic Forum’s competitiveness index) are making it rise above the rest.

In an era of protectionism where the jitters of COVID-19 are still being felt by many economies, Vietnam is soaring to become one of the prime locations for export manufacturers. With its continuous and proactive efforts for open border partnerships (the country is part of over a dozen free trade agreements), Vietnam is a country that could possibly change the course of the tech era that lies ahead.

Related Posts

USA: Online Smartphone Sales Remain Strong at 13% of Total Sales in Q2 2018; Prime Exclusives by Amazon Drive Sales

Apple iPhones remain the most popular models across both online and offline channels.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul August 29th, 2018

According to the latest research from the Counterpoint Smartphone Channel Share Tracker service, the share of online smartphone channels grew to 13% of total US smartphone sales in Q2 2018 compared to 12% in Q1 2018 (see here). However, total online volumes dropped 9% QoQ due to a weak Q2 sales cycle. In fact, total sales in H1 2018 are down 12% compared to 2017. Despite these downward trends in the US smartphone market, online market sales have held steady due to savvy consumers jumping on online-only deals and other online exclusive events such as Amazon’s Prime Day. They are not the same level as China (see here) or India (see here) but the trend is surely shifting.

Commenting on the competitive landscape in Q2, Research Director Jeff Fieldhack highlighted, “Once again, led in online sales with 23% of total smartphones sold online. Prime Exclusive smartphones such as the Moto G6 and the Moto Z3 were successful in driving sales. Beyond Q2, Prime Day was once again a success and saw several unlocked phones such as the Samsung Galaxy Note 8 and Huawei’s Mate 10 Pro get a boost in sales due to steep discounts. Carriers were able to hold their sales somewhat constant in Q2, offering some online-only discounts that savvy consumers took advantage of. BestBuy and Apple are jostling for third and fourth place as Apple saw a slight downturn in online sales due to customers holding off on new phone purchases until the new iPhone series is announced in the coming month.”

Q2 2018: % Share of Overall Smartphone Sales via Online Channels

Source: Counterpoint Research – Smartphone Channel Share Tracker Q2 2018

Research Director Peter Richardson, commenting on price bands added, “Online sales in the mid-tier and upper mid-tier price band segments have higher shares compared to offline sales. Many solid unlocked phones are sold in these price ranges, such as the Prime Day LG V35 ThinQ, which was discounted $300. This is a sweet spot for many consumers looking for a quality device, often unlocked, without having to spend a lot of money on more premium devices that may come with certain carrier restrictions or contracts. Offline sales tend to do better at the low end. Sub $100 price band smartphones are most often purchased in brick and mortar stores in national retail and prepaid channels. The premium price bands for both offline and online sales had similar shares. However, online sales in this segment are mainly driven by Apple’s online store and to a lesser extent Samsung’s. It is true that people still want to come in and try devices out first-hand. However, their final purchase decision is split between online and offline channels. Convenience for the customer plays a big role here. Is the device available at the store? Do they need to order it? Can it get delivered with two-day shipping? All these factors come into play.”

Q2 2018: Online and Offline Smartphone Sales by Price Band

Source: Counterpoint Research – Smartphone Channel Share Tracker Q2 2018

Commenting on the US online market dynamics, Research Analyst Maurice Klaehne said, “Amazon has really proven that they are able to capture a significant share of the online smartphone market compared to carriers. In their Q2 earnings calls, all the Big Four carriers commented that their device sales have dipped (see here). Amazon remains very competitive with its pricing and Prime-only deals. These offerings fit nicely within their Amazon Prime membership strategy, as often they can deliver smartphones faster than carriers can. Prime customers are also not locked into buying the limited and sometimes overpriced accessories that carriers have in their stores both online and offline. They have a whole marketplace for accessories to choose from and often these will arrive at the same time as the smartphone.”

Q2 2018: Revenue by Select Online Channels

Source: Counterpoint Research – Smartphone Channel Share Tracker Q2 2018

Mr. Richardson added, “When you compare online smartphone revenues from Amazon to two of the national retail giants Best-Buy and Walmart, you can see how well it is outpacing the competition. The sheer scale that the online retail giant is able to create with its large device portfolio creates revenues that are larger than both Best-Buy and Walmart combined. Walmart caters more towards low-end devices, both unlocked and prepaid and relies on foot traffic to make sales. Best-Buy on the other hand has very similar products, especially in the premium segment. However, it can’t keep up with the volumes of devices sold by Amazon.”

Commenting on offline channel trends, Mr. Fieldhack added, “Brick and mortar stores will still be one of the main channels for smartphone sales. Physically touching and testing high-end devices is still important for the consumer as flagship ASP’s continue to climb (see here). Stores also provide a better opportunity to up-sell insurance. While Amazon is doing well, carriers still have the upper hand. Online sales will continue to grab small amounts of market share, but it will not spike outside of key flagship launches, holidays, and special online sale days. This is because prepaid remains a considerable amount of the US market. Prepaid subscribers are often credit challenged and limited in buying online.  In addition, the refurbished market is growing in the US, and this incentivizes many customers to trade in a used device in-store when purchasing a new smartphone. Devices brought into stores are seen as more likely to be properly wiped of all data and disposed of properly by customers.”

This is an excerpt from our smartphone channel share tracker service across different geographies providing highly detailed insights and analysis – answering the why, backed by a solid granular sales database mapped across different channels – offline and online.


Counterpoint Technology Market Research is a global research firm specializing in detailed industry analysis of the TMT sectors. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of over 16 years in high tech industries.

Analyst Contacts:

Jeff Fieldhack
+1 858 603 2703

Maurice Klaehne
+1 617 336 8383

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Microsoft Acquires Nokia :: Integration, Marketing & Business Model Rejuvenation Will Be The Key

Surprising end to the US Labor Day weekend as Microsoft announced its next big strategic move in mobile space to acquire the world’s second largest handset supplier Nokia at the end of Q2 2013 according to Counterpoint Research’s Market Monitor service. The long speculated “possible acquisition” of Nokia by Microsoft finally hit the papers as Microsoft drummed is renewed ‘strategic need’ of expanding its hardware business to further tightly control the ecosystem. We believe this need emanates from the trend with the now most powerful companies in mobile industry and Microsoft’s key competitors Apple and Google making strides towards becoming highly vertically integrated though on paper the respective business model differs by a wide margin.

Microsoft Ecosystem portfolio With Nokia Acquisition

What does Nokia Devices & Services arm acquisition mean for the mobile Industry and the entire value chain?


For Microsoft:

  • Fills the much needed portfolio gap “mobile hardware engineering & related patents” with a high smartphone synergy.
  • Microsoft will gain full access to world’s largest supply chain and distribution channel assets.
  • Microsoft will be able to gain control of Nokia’s world class manufacturing facilities, resources and engineering talent.
  • For Microsoft Nokia’s 200 million per year declining but marginally profitable feature phone business will be a burden for short- to mid-term.
  • Microsoft will have a big marketing task to solve the mobile “sub-brand” puzzle in terms of Windows Phone vs. Lumia vs. Surface.
  • With current licensing model and now with Nokia’s acquisition, this deal will possibly close the avenue for licensing opportunities to other device manufacturers, operators interested in Windows Phone ecosystem. Thus, Microsoft will need a radical change in its mobile business model by reducing the licensing fees to minimum and monetize through the huge portfolio of services it has.
  • Deal potentially paves the way for Stephen Elop to succeed Steve Ballmer as Microsoft CEO even though the deal announcement suggests Elop will continue to head the Nokia business within Microsoft but we see Elop now as the front runner to succeed Ballmer as overall head of Microsoft.
  • For a long time it was viewed as the ‘evil empire’ but this sentiment has shifted more toward Google. However so far Microsoft has failed to take advantage of the more open minds of consumers. The Windows 8 computer operating system has been poorly marketed and Windows RT a solution to a problem no one has. Windows Phone is a powerful platform that we believe consumers would be willing to accept if only they were given a chance to understand what it has to offer – something Microsoft has again failed to do.
  • This puts onus now completely on Microsoft to better communicate its mobile (Windows Phone) story well as until now it has been all Nokia which has done all the hard work in driving the Windows Phone ecosystem with differentiated innovation and Lumia brand. Microsoft has its work cut out to first leverage the synergies and align to the “clock speed” of that of likes of Apple or Samsung to deliver the products on time and not as a routine software vendor.
  • Critical to success in gaining wider adoption of Nokia WP8 devices will be the early integration and empowerment of the development and marketing teams within the combined entity. Extended turf wars and in fighting will kill what impetus currently exists.
  • However, the toughest challenge for Microsoft would be to retain Nokia’s existing worldwide talent over the period of next two years and not follow Google’s path which has almost blew up Motorola’s talent pool since acquisition couple of years ago.


For Nokia:

  • This is a big step for Nokia as a company which ruled mobile phone industry for a decade, this acquisition possibly ends the Finnish legacy in this segment and a chance to stand up again in the smartphone segment on its own.
  • Though Microsoft will own the “Lumia” & “Asha” brands but the future of these ‘brands’ look bleak considering a strong association with “Nokia” rather than with Microsoft. As a result all the hard work put in to revive Lumia as the popular smartphone sub-brand goes down the drain, return on investment on Lumia brand hence is pretty low.
  • Overall, we believe the $7.4 Billion valuation of Nokia Devices & Services plus huge portfolio of patents, manufacturing and engineering resources, supply chain scale & distribution reach is on a much lower side considering Motorola a fifth of Nokia’s size was sold for more than US$12 Billion to Google couple of years ago. The entire acquisition is highly undervalued for Nokia’s shareholders.
  • However, for the Finnish surviving Nokia, Nokia Solutions & Networks (NSN), fast-growing HERE arm and other future innovations biz now becomes much leaner without extra legacy devices baggage and can grow much faster independently. We believe HERE is a highly potential platform to power current and next generation connected devices (smartphones, cars, wearables, etc). NSN on other hand will look forward to win opportunities from the robust LTE growth forecasts according to Counterpoint’s Market Outlook service with networks powering not only billions of mobile devices but billions of other connected devices across number of verticals.


For Component Vendors, Suppliers & Partners:

  • This is a big deal for component vendors and the entire supply chain which dependent on Nokia with low confidence now on the possible future relationship and what happens to the feature phone business under Microsoft.
  • At the same time this also opens up the opportunities for newer smartphone component supply chain companies which previously didn’t get access at Nokia and stand a chance to win over at Microsoft. e.g. NVIDIA
  • But in terms of Microsoft’s existing partners and distributors they will have a wider addressable market to sell to in terms of products and services.
  • It will be interesting to see how the carrier partners globally react to this deal as they will be wary of the fact that they don’t need another Google, Samsung or Apple. e.g. AT&T,  Telefonica


For Competitors:

  • The deal could possibly affect Nokia’s existing feature phone business (with low interest from Microsoft) which would leave a big supply gap for the near to long-term and might be a big opportunity for Asian tier-1 vendors such as Samsung, ZTE, TCL-Alcatel to Tier-2 & 3 vendors such as Micromax, Lava, Karbonn and Others.
  • For OEMs such as LG, Huawei, ZTE, HTC and even Samsung which were evaluating Windows Phone as a possible alternative to Android will now divert more resources to other upcoming platforms such as Firefox, Tizen, Ubuntu and even Jolla.
  • For Apple & Google this could be a big competitive challenge and how it reacts to Microsoft becoming more vertically integrated as Apple.


Ecosystem wars have thus got more interesting. All eyes will be on Microsoft as to which way it will go in terms of  business model perspective – either Apple’s or Google’s way. Conversely, Microsoft could also innovate to find a middle ground (from biz model perspective) to keep the partners, customers and consumers happy with great and tightly integrate connected hardware, software and services. Lots of work needs to be done on this front from scratch (again) to cement the third ecosystem spot and challenge Apple for the second spot in long run.


Neil Shah

Counterpoint Research


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