Vietnam: rising star in electronics

 

I recently returned from a trip to Southeast Asia, including Vietnam. The trip was for pleasure, not business, but I could not help but notice the boom in economic activity. The coastal cities of Hai Phong, Da Nang and NHA Trang were trying to outdo each other in building hotels, bridges and amusement parks – largely to cater to foreign tourists. A trip up the river to Ho Chi Minh City (previously Saigon) revealed many huge industrial buildings including several under construction.

How does Vietnam fit in the electronics industry? The chart below shows exports of electronic equipment for key Asian nations from the World Trade Organization (WTO). The data excludes semiconductors and components. China remains the dominant Asia electronics exporter with US$477 billion in 2013. The next largest exporter is South Korea at $49 billion. Vietnam is eighth at $18 billion. However over the five years from 2008 to 2013 South Korea, Japan, Malaysia and Singapore have declined in electronics exports. Thailand and Taiwan each had a compound annual growth rate (CAGR) of only 2% from 2008 to 2013. Vietnam had an explosive 43% CAGR. Although the growth rate of Vietnam electronics exports is certain to slow in the next few years, Vietnam could eventually challenge South Korea as the second largest Asian exporter of electronics.

Asia ee

Vietnam had a population of 89.7 million in 2013 and a labor force of 53.2 million. The labor force is fairly young compared to many industrialized countries, with 50% under 40 years old. Total mobile phones exceed the population with smartphones at 23% of the population. 41% of the population are internet users, the same percentage which own motorbikes. If you have ever seen the bedlam on Ho Chi Minh City roads, it does appear everyone is using a smartphone while riding their motorbike.

Vietnam

Millions, 2013

% of population

Source

Population

89.7

100%

Vietnam government
Labor force

53.2

59%

Vietnam government

Mobile phones

140

156%

IDC

   Smartphones

21

23%

IDC

Internet Users

36.6

41%

Internet live facts

 

Foreign direct investment in Vietnam in 2013 totaled US$21.6 billion, according to the government. The largest investments by country were Japan at 27%, Singapore and South Korea each at 20%, and China at 11%. Electronics companies with significant investments in Vietnam include Samsung Electronics, LG Electronics, Microsoft’s Nokia division, Intel, Foxconn (Hon Hai) and Jabil. Vietnam experienced steady GDP growth ranging from 5.2% to 6.4% each year from 2008 to 2013 despite the global recession in 2009. There have been some problems recently. In May 2014, many Vietnamese protested a dispute with China by rioting and damaging many factories in Vietnam. Although Chinese-owned factories were targeted, some factories owned by Taiwanese, Japanese and South Korean companies were also damaged. The government appeared to successfully end the protests.

Vietnam has taken inspiration from China, having a capitalist economy with a communist government. Vietnam is well situated geographically – bordering China, in the center of Southeast Asia, generally less susceptible to the natural disasters (earthquakes, tsunamis and typhoons) other countries in the area have experienced, and with several good ports along over 2000 miles of coastline. Vietnam is on its way to becoming a significant country in electronics manufacturing and semiconductor consumption.

2014 semiconductor market forecast on target

The 2014 semiconductor market was US$335.8 billion, according to World Semiconductor Trade Statistics (WSTS). 2014 increased 9.9% from $305.6 billion in 2013. We at Semiconductor Intelligence have held to our forecast of 10% semiconductor growth in 2014 since February 2014. Our earlier forecast in November 2013 was 15% growth. Most other 2014 forecasts released in early 2014 were much more conservative with IDC at 3.6%, Gartner at 5.4%, IC Insights at 7% and usually optimistic Future Horizons at 8%. Objective Analysis in December 2013 and May 2014 projected over 20% growth in 2014. Mike Cowan’s monthly forecast for 2014 was 3.6% in February 2014 but was raised to close to 10% by April 2014.

In December 2014 Semiconductor Intelligence projected 11% growth for the semiconductor market in 2015. As in early 2014, we are at the high end with January 2015 forecasts for 2015 ranging from IDC’s 3.8% to Future Horizons 8.5%. We will update our 2015 and 2016 forecasts in our March newsletter.

CES 2015: wearables and smart home

2015 International CES was held last week in Las Vegas. The Consumer Electronics Association (CEA) which puts on the show said over 170,000 people attended. The show featured more than 3,600 exhibitors covering over 2.2 million square feet of exhibit space.

In advance of the show, CEA released highlights of its forecast for the 2015 U.S. consumer electronics market, measured as shipments to U.S. dealers. The overall market is expected to grow 3% from 2014. One of the fastest growing markets is wearables at 133%. Wearables includes smartwatches and health & fitness trackers. Smartphones are expected to grow 5% and account for 23% of the overall consumer electronics market. Tablets, which have been a hot growth item since Apple reinvigorated the market with the iPad in 2010, are projected to decline 1%. Overall televisions and displays are forecast to decline 2%, but 4K or Ultra High Definition (UHD) TV revenues should double from 2014.

U.S. Consumer Electronics Market Forecast, $ Billion

Source: Consumer Electronics Association (CEA)

2014

2015

Change

Total

217

223

3%

Wearables

2.2

5.1

133%

Smartphones

48.9

51.3

5%

Tablets

25.2

24.9

-1%

TVs & Displays

18.7

18.3

-2%

    4K UHDTV

2.4

5.0

106%

 

UHDTVs have become a mainstream product fairly quickly. In our 2013 International CES report, Semiconductor Intelligence stated: “The biggest visual impact was from 4K (or Ultra HD) TVs. With price tags of $20,000 and up and little content in 4K, 4K TVs will not have measurable impact on consumer electronics for a few years.” Now Bestbuy.com has major brand 55 inch UHDTVs for as low as $1000. CEA’s forecast of a $5 billion UHDTV market consists of 4 million units at an average dealer price of $1250.

The hot product categories at 2015 International CES were digital health & fitness and connected home. The 2014 CES featured 366 exhibitors under the category of digital health and fitness. For 2015 the category was split into three (fitness & sports, health & biotech and wearables) and featured a total of 1,781 exhibitors, almost five times the number in 2014. The 2014 connected home category featured 982 exhibitors. In 2015 the number more than doubled to a total of 2,066 exhibitors in three new categories (smart home/appliances, safety & security, and energy management). The total of 3,847 exhibitors in these two categories is about equal to the total number of exhibitors at 2015 CES. Obviously many companies are classifying products in these categories as well as in the traditional CES categories. There is also likely overlap in the subcategories.

Digital health & fitness and connected home are each part of the “internet of things” or IoT. IoT has been much hyped in the last few years as a major growth area for electronics and semiconductors. Many definitions exist, but the internet of things can be simply defined as any device which communicates over the internet and is not a computer, tablet or smartphone. These devices often communicate with the internet automatically without the need for human intervention.

At 2015 CES, A&D Medical released the results of a survey of 2,024 U.S. adults conducted by Harris Poll. The survey showed 56% want to monitor their health with connected devices. The most desired vital signs the participants wanted monitored were blood pressure, weight, chronic conditions such as diabetes and hypertension, sleep, physical activity and diet. Only 5% wanted to monitor their sexual activity. However that low number did not stop OhMiBod from introducing a product in the category of wearable sex technology. We won’t go into detail here, but the specifics are in OhMiBod’s press release.

The 2015 CES Innovation Awards featured several products under the categories of wearables; fitness, sports & biotech; and smart home.

The Polar V800 (below) is a multisport GPS watch for activity tracking and fitness training with a list price of $520. It not only looks complex, the manual is 102 pages.

V800_Black_Front_Pace_Dist_Exe-time_imperial_JPG-(1)_1

The Withings Activité in contrast is a simple and elegant looking analog watch which doubles as an activity tracker and retails for $450.

1-Withings_Activit-eacute

 

The InBody Band measures body fat percentage, muscle mass and fitness as well as tracking daily activities. All in a smart looking smart band.

inbodyband_CES

The Cloud Based Advanced Smart Robo VacMop from Moneual learns from prior cleaning history data saved on the Cloud. This device could be also be classified under “things we didn’t know anyone needed” and “fun things to scare your cat.”

Cloud-based-Advanced-Smart-Robo-VacMop-Pspt_1

Also from Moneual is the Smart Beauty Mirror, an integrated grooming gadget with a mirror that “provides personalized fashion and beauty care information through face analysis, skin monitoring, trending fashions, web contents and more.” Now every woman can have the magic mirror the evil queen had in Sleeping Beauty.

Smart-Beauty-Mirror-Pspt_1

Netatmo’s WELCOME is a smart home camera with facial recognition. “It learns to recognize your household members and updates you on who is home when you are not, with concise notifications on your smartphone or your smartwatch.” Good way to keep your home safe and spy on who is with your kids when you are not home.

Press Kit Web_2

Another product for the paranoid home owner is Giroptic’s 360cam, a true 360 degree HD video camera.

360cam_1

Kodak has a baby monitor which allows a parent to have video and audio from the parent unit and on mobile devices. This device will familiarize your baby with a world in the near future where he or she will always be under surveillance.

baby

It is difficult to predict which of these products will be successful. However the “internet of things” is more than just hype – it is a fast growing area of consumer electronics.