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Asian AngleVietnam’s ‘tech moment’: what’s next after the FDI boom?

Vietnam needs to focus on upgrading domestic capacity and implementing urgent reforms, or risk becoming a second-tier assembly line

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Workers stitch garments at a factory in Vietnam’s Thai Nguyen province on July 2. Photo: AFP
Xu Jingzhi
As an emerging and dynamic economy in Southeast Asia, Vietnam has been rapidly integrating itself into global tech supply chains. While its rise, fuelled by foreign direct investment (FDI), has been remarkable, Vietnam now stands at a pivotal juncture: will it seize this moment to move up the value chain or remain stuck in low-margin assembly?

Since 2018, US tariffs on hundreds of billions of dollars of Chinese goods have pushed multinational companies to relocate their manufacturing operations and diversify their supply chains to avoid tariffs. This is referred to as the “China plus one” strategy. Vietnam has been one of the top recipients of these relocations, especially in electronics, furniture, garments and machinery.

In electronics manufacturing, Vietnam has emerged as a global hub for assembling products like smartphones, computers and consumer electronics. Foreign investors have poured billions into factories – Samsung alone contributed about US$55 billion in exports in 2023, constituting nearly 50 per cent of Vietnam’s electronics exports. Vietnam’s electronic goods in 2023 accounted for 31.9 per cent of the country’s total export value. The figure rose to 34.3 per cent last year, far surpassing all other sectors.

A container is loaded onto a cargo ship while docked at Hai Phong port. Vietnam’s electronic goods in 2024 accounted for 34.3 per cent of the country’s total export value. Photo: Reuters
A container is loaded onto a cargo ship while docked at Hai Phong port. Vietnam’s electronic goods in 2024 accounted for 34.3 per cent of the country’s total export value. Photo: Reuters
However, challenges remain. Much of the electronics production is still at the lower end of the value chain – primarily assembly, packaging, and testing of components designed elsewhere. For example, Vietnam’s nascent semiconductor industry remains focused on assembly and chip packaging. In addition, Vietnam is not the only “one” in the “China plus one” strategy; it faces competition from other regional powers, including many of its peers in Southeast Asia. Its enduring reliance on China for intermediate inputs makes it hard to navigate US trade measures and geopolitical shocks.
Vietnam has long positioned itself as a manufacturing base that is friendly to FDI. It attracted roughly US$38 billion in FDI in 2024, outpacing Malaysia. Vietnam is party to 17 free-trade agreements, including the Comprehensive and Progressive Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, giving it deep integration into global supply chains.
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