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Thailand’s Electronics Sector Becoming a Magnet for Investors

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The recent worldwide pandemic and current trade friction between the U.S. and China did not impede Thailand’s electronic and electrical (E&E) industry. On the contrary, these impediments only served to show the resilience of the E&E sector.

Consequently, many investors see this industry as a haven and data from the Thailand Board of Investment (BOI). In the initial two quarters of 2020, the number of domestic and foreign companies that put forward applications to invest in the country’s E&E sector increased to 106 projects. Previously, there were 94 projects during the same period in 2019.

This makes Thailand the most popular sector, and the sum of over $1.2 billion in investment applications was forwarded to the BOI.

Supply Chains

Electronics Sector-Thailand

Having amassed a supply chain made up of about 2,500 businesses. Nearly 800,000 members, including the likes of vocationally trained technicians, competent assembly line employees like Samsung factory seconds, and researchers with doctoral degrees, the electrical sector is the largest manufacturing employer in the country, per the Electrical and Electronics Institute (EEI) of Thailand.

In a statement about the innovation-driven growth strategy deployed by Southeast Asia’s second-largest economy, the president of EEI called Nurat Rukirat mentioned that “E&E is fundamental to Thailand 4.0.” Thailand 4.0 in this sense means the upgraded and improved vision of a better Thai economy.

The Vision

Quite an ambitious vision that requires the creation of a regional center for the most advanced and latest developments in industries such as electric vehicles (E.V.), medical devices, automation, and robotics. Fueling all of these is the technological transformation of one of the country’s very mature and essential industries, electrical and electronics, into a sector better known as “Smart E&E” and the rising popularity of the supposed Internet of Things (IoT).

Sources from GSB Research, the research arm of a state-owned bank in the country, mentioned that the E&E of Thailand has flourished and metamorphosed into a global powerhouse. As such, this sector has become the second biggest exporter of washing machines, air conditioners, and computer hard disc drives. Therefore, the success stories of foreign investors in Thailand are so many.

Foreign Trade And Investors

Electronics Sector-Thailand

As far back as 2002, Benchmark Elctronics Inc., a company listed in New York, made $45 million for the U.K. and Thailand operations. Benchmark’s Thailand subsidiary currently comprises one-fifth of its $2.3 billion global revenue following its transformation into a highly sophisticated manufacturer of high-end products such as defibrillators, surgical lasers, and optical sensing tech for electrical gadgets.

Mr. Ronald Rocha, Vice President for Electrical Manufacturing Systems of Benchmark in Asia, noted that “The Thai acquisition was an excellent decision.” He remarked at the unit’s headquarters called Hi-tech Industrial Estate situated on Bangkok’s north side. He also added that “In the past, companies would go to countries like Thailand just to reduce cost. But, We are here because of capability, technology, and quality, as well as the low-cost advantage. The government is very stable. Growth for us has been nonstop.”

Delta Electronic Inc

Another excellent example of investors in the E&E sector is Delta Electronic Inc. This is a Taiwan-based international company among the top manufacturers of power supplies and electronic fans vital in the cooling systems of home appliances, medical devices, smartphones, electric vehicles, and computer systems. Delta Electronics initially established a factory in Bangkok in 1988; by 1995, the company listed its Thai subsidiary on the country’s Stock Exchange.

At present, the Thai subsidiary of Delta Electronics has over 12,000 employees and brings in $1.6 billion or almost 18% of the multinational corporation’s $9 billion total revenue. The regional headquarters of all Delta operations in Australia, India, and the rest of Southeast Asia is situated in Bangkok. Also, the Thai headquarters manages research and development centers in Bangkok, Germany, India, and the U.S.

As Delta Electronics (Thailand) intends to open a third factory in Thailand, several expansion plans are in motion. Concerning the goals and motives of Delta Thailand, Jackie Chang, president of Thai operation, stated that “As an investor, we wanted to find a country that can give you confidence for the long term, and so they chose Thailand.”

He also added, “It is also perfect for logistics, such as sea and airfreight, also the people can adapt easily to different cultures.”

Other Major Investors Present in Thailand’s E&E

Electronics Sector-Thailand

Apart from these two companies, other international businesses present in Thailand’s E&E are Bosch and Siemens from Germany, Sony, Mitsubishi, Daikin, Toshiba from Japan, Seagate, and Western Digital from the U.S., plus L.G. and Samsung from Korea.

Apart from foreign players, the industry boasts several domestic torchbearers like the Thai-German joint venture called ThaiGerTec. This company specializes in designing and creating power electronics, microelectronics, and embedded systems in automobiles.

Then there is another called Silicon Craft that designs chips. Overall, Thailand’s E&E sector rakes in about $56.5 billion in 20219, most as exports. Per the Thailand Ministry of Commerce and GSB Research, this figure accounts for about 24% of the country’s total export revenue.

Conclusion

Both Delta Electronics (Thailand) and Benchmark Electronics Inc. are optimistic about the future of the Thailand E&E sector. According to Mr. Rocha, investors have a lot to expect in the short and long term, particularly in 2021 and 2021.

These years should be pretty significant for the electrical industry in Thailand, and investors are looking to make the most of it. Most of the investors in this sector are looking at increasing their investments, and the BOI will play a vital role in the impact investors make in Thailand’s E&E sector moving forward.

 

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