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Asia's emerging electronics frontiers

Posted: 16 Feb 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Majeed Ahmad? electronics? supply chain? Majeed Ahmad?

The electronics supply chain evolution in Asia is turning out to be a remarkable tale and the places to watch are apparently mainland China, South Korea and Taiwan.

And when it's not about China, Taiwan or South Korea, it's probably about Singapore's agony to catch up with its glories from a not-so-distant past. How will the Lion City regain its status as Asia's electronics hub?

But there is more to Asia's electronics fortunes. Vietnam and Thailand, for instance, are emerging as the two new bright spots on the region's electronics horizon.

Although almost all leading Japanese OEMs have set up shops in Vietnam, Taiwan is the biggest investor here with a total of $7 billion in FDI capital investment. Most companies investing in Vietnam are those that already have manufacturing presence in mainland China and don't want to put all their eggs in one basket. But for Taiwan, cultural and geographic affinities are a significant factor as well.

Vietnam's favorable skilled-labor and well-run science parks add to the luster. The country has also initiated the process of legal reforms and is expected to join the World Trade Organization (WTO) soon, which could further encourage accountability and transparency.

Then we have Thailand hoping for its own electronics manufacturing renaissance. The country took off well in the 1980s and 1990s in electronics equipment and component manufacturing, offering the benefits of lower costs and economic and political stability. Then, in 1997, came the Asian currency crisisand one of its victims was Thailand's flagship $1 billion DRAM fab Alphatec.

Today, like Vietnam, Thailand is becoming an alternative manufacturing destination for companies suffering from China fatigue. The semiconductor assembly-and-test industry is flourishing. Microchip, which opened a packaging plant in China earlier, is now refocusing its back-end operations on its plant outside Bangkok. There is also talk about reviving wafer fab plans as the Thai government takes new steps to rebuild the electronics industry.

We could say it's all about manufacturing, but that's how it was for Japan, South Korea, Taiwan and mainland China way back. All these electronics powerhouses started with low-end manufacturing, moved to high-end manufacturing and then to the fringes of electronics design before they embarked on a journey toward core design technologies.

The new electronics wannabe's seem to have learned the right lessons from the evolution of the electronics industry in Asia and are quietly pulling in manufacturing investment dollars first.

Both Thailand and Vietnam have a long way to go for developing their electronics supply chain. But they are beginning to show up on the industry radar as they begin to build a viable electronics industry.

- Majeed Ahmad
Electronic Engineering Times-Asia

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