Who Will be the Next Electronics Manufacturing Powerhouse?

For as long as we can remember, China held the lion’s share of the electronics manufacturing market share. The noteworthy powerhouse by far exceeded the output of all other countries due to its ability to keep costs low and service global demand for various components and finished goods. 

But, while it currently maintains its leadership, China is seen to be giving way to various other countries breaking into larger chunks of the sector—shaking things up and raising the question as to who will be the next electronics manufacturing powerhouse. 

When you look at the trends, this is understandable. A number of countries are emerging and global events initiated a shift that sees many of them expanding their efforts to enhance their capabilities as the world goes ever more digital. With this in mind, it’s important to look at the global market as a whole to understand how things will pan out. 

What are the Drivers of Global Electronics Expansion?

Given just a snapshot of global media, it’s become apparent that Vietnam is expanding its manufacturing capabilities, but there are also emerging countries beyond East Asia’s border. India expects a rapid increase in electronics output in the coming years while, further afield, the Dominican Republic, Mexico, and other countries in Latin America all stand to increase their output significantly. 

The increase in demand for electronics across multiple facets, including advanced consumer and industrial electronics, make technology a key investment area for many nations. Also, despite potential threats to countries and their economies—resulting from international (or potential) conflict—some places are still able to push forward with modern developments and embed their technologies into the digital ecosystem. 

While industries such as energy and automotive look to localize production of much larger solutions, they hinge on the availability of in-demand components, of which many are in short supply when you factor in the rate of technology’s growth. 

Potential APAC countries to lead electronics manufacturing exports

The APAC region continues to produce a major portion of the world’s electronic components from PCBs to semiconductors. These countries are seen to be growing despite China’s recovery from the global pandemic.

India

India has experienced significant growth in electronics manufacturing capacity, which not only brings increasing value to the country, but also puts the nation in the conversation as a high-scaling technology provider. 

Also influenced by the need to decarbonize, India, its government, and external investment drives economic growth through its electronics sector. 

Vietnam

Serving countries across all regions, Vietnam gained massive revenue from exports in 2022. From a little over US$1bn worth of mobile phones in Thailand to more than US$16bn to China, Vietnam supplies mobile phones to some of the largest and strongest economies, including the US, United Arab Emirates (UAE), the UK, India, and Germany. In terms of its overall electronics supply, the US was its largest customer.

Looking at the country’s success, we see another driver at play—foreign investment. Vietnam is dominated by foreign multinational corporations, which is representative of globalization at its finest. 

Taiwan

Taiwan has been branded as ‘indispensable’ as a key supplier of technologies to leading firms like Apple, Google, Meta and Amazon. An important part of the conversation is the volatility of Taiwan’s situation. The country’s supplies present a global technology industry crisis as long as China and the US are at arms over semiconductor sourcing. 

Major industry players are unnerved by the China-US dispute over Taiwan’s precious supplies, and a step too far on either side could encourage an overwhelming shift in the paradigm. 

Malaysia

Semiconductor manufacturing is one of the country’s most important industries and Malaysia is known to host experienced talent, which is otherwise lacking in other parts of the world. As China lacks in the necessary skilled labor to generate a high output of semiconductors, Malaysia takes precedence as a beneficial provider of a necessary part alongside PCBs. . 

This is also thanks to favorable exchange rates and foreign investment, which support the industry as it doubles down on PCB manufacturing. The country reached US$5.83bn in foreign investment value as recorded in December 2023.

Growth in Latin America’s electronics output

Tensions between China and the US drive more nearshore investment, which is also part of plans to localize trade in its region.

Latin America - Mexico

As both China and the US demand high quantities of electronic components for themselves, a major shift has happened in that The States are now looking elsewhere for manufacturers closer to home. Original Equipment Manufacturers (OEMs), contract manufacturers and electronics manufacturing services are shifting more of their needs to Latin America where the capacity for and proficiency in parts manufacturing is growing significantly. 

Mexico is cited as one of the main providers that could see much of China’s US-backed demand migrate across in the coming years, which—if demand can be met—would create a valid use of an intrinsic link between Mexico and the US. This will most likely contribute to the predicted US$1tn of trade across their border in 2028. 

The coronavirus pandemic will also play on the minds of corporations in the US as they attempt to build more resilient supply chains, which puts Mexico and other Latin American traders at an advantage over China—if they can provide the necessary capacity.

Latin America - Dominican Republic

Based on the geopolitical tensions between the US and China, the Dominican Republic (DR) is also seen as an up-and-coming candidate for nearshore investment. The DR Is primed and ready to share its PCB capacity with the US as it delivers on its CHIPS and Science Act—committing US$52bn of federal funds to sourcing electronic components for its growing technology–driven economy. 

Aside from the DR’s growing capacity—almost 5% per annum over the past 50 years—and expertise in this space, the country benefits from political stability, and beneficial trade agreements and regulations. As a result, its neighboring region sees great potential for increased trade with reduced taxation and minimal disruption. 

The Paradigm Shift Creates Interest in Growing Electronics Manufacturing Markets

The actions of the world’s largest economies, the US and China, plays a huge role in the shifts in power that we’re seeing today. This influences changes in the global electronics supply chain, including international trade policies, technology developments, and over market dynamics that have shifted the responses of countries across LatAm and APAC. 

Nearshoring efforts from The States will allow greater prosperity for countries in the south while APAC-based producers seem to build their independence to meet evolving changes around the world—from the increase in demand for consumer goods and industrial technologies to the adoption of smart technologies that allow this growth. 

Past actions were taken to recover from global events, like COVID-19 and other disruptions, but now leaders are looking to build resilience and, in many cases, offer developing economies an increased stake in electronics manufacturing’s value. 

As digital technologies become more available in this way, developing economies are rising to the needs of global digital transformation, which will encourage more technological innovation as long as countries can navigate the inevitable resource pressures and build resilience to changes among the world’s most powerful countries. 

Watch On YouTube - Electronics Manufacturing Industry Overview: Who's the Next Powerhouse?

In the comprehensive video analysis hosted by Joel on the Octopart Youtube channel, "Who Will Be the Next Electronics Manufacturing Powerhouse?", viewers are taken through a journey of shifting dynamics in the global electronics manufacturing industry.

Historically dominated by China, the landscape is now witnessing the rise of new players such as Vietnam, India, and regions like Latin America due to the disruptive impacts of the pandemic and evolving market needs. The video explores how these countries are strategically enhancing their manufacturing capabilities and the potential implications for the global market.

Join Joel as he delves into key factors such as government policies, geographical advantages, and the strategic importance of skilled labor in determining who might ascend as the new leader in electronics manufacturing.