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STRONG E&E THINGS: THE NEXT GROWTH ENGINE FOR THE SEMICONDUCTOR INDUSTRY


(Source: Thailand Investment Review, July, 2017)

Building on its well-established infrastructure in the manufacturing sector and a supportive government policy, Thailand is strongly positioned as a leading production base for Electrical & Electronics (E&E) in Southeast Asia. Since the first electronics factory in 1962 was established assembling radios and televisions, the industry has grown substantially over the past five decades becoming the country’s major exporter. In 2016, total export revenue from the industry reached THB 1.76 trillion (USD 51.6 billion), accounting for 14% of the country’s GDP. Thailand was ranked the 14th largest E&E exporter in the world in 2016.

A global manufacturer of electronics products

With the country’s competitive labor costs, skilled manufacturing competencies and a reliable supply chain, Thailand is one of the largest electrical appliance producers in ASEAN. The country exported more than THB 590.8 billion (USD 17.3 billion) in electrical appliances in 2016. In the first quarter of 2017, the export reached THB 156.9 billion (USD 4.6 billion), reflecting a growth rate of 4.9% compared to the same period last year. Air conditioners, cameras, and refrigerators are three of the leading exports. Top multinational companies have established their production base in the country including Daikin, Mitsubishi Electric, Toshiba, Samsung, LG, Sony, Nikon, Canon, Fisher & Paykel and Electrolux.

The demand for air conditioners continues to grow with more than 35 million air conditioners produced in the country in 2016. Given the abundant raw materials and strong supporting industries, ranging from compressors, and motors and parts, Thailand is recognized for its competencies and for being the world’s second-largest manufacturer of air conditioning units. In addition, with changing consumer demand and technological advancements, the market share for inverter air conditioners in Thailand is gradually increasing. The country is also a significant producer of washing machines and refrigerators. Thailand was ranked the fifth-largest washing machine producer in 2016, with 9.4 million units produced, growing 14.0% from 2013. The growth rate for refrigerators was 9.8% from 2013-2016 with 8.8 million units produced, ranking Thailand seventh-largest in the world for refrigerator manufacturing last year. 

Electronics industry continues to forge ahead

Thailand is one of the main suppliers of electronics to the world. In 2016, Thailand exported over THB 1.17 trillion (USD 34.3 billion), accounting for 15% of the country’s export value. While in the first quarter of 2017, the export reached THB 293.5 billion (USD 8.6 billion). Thailand is well-known as the world’s second largest manufacturer of Hard Disk Drives (HDDs). The country exported over 93.4 million units of HDDs in 2016, supplying about 30 percent of the global market. And with the increasing usage of cloud computing and storage, the growth in HDD production is shifting toward innovative products by increasing storage capacity per unit. Approximately 45% of the total production was exported to other countries. The export value has increased at an impressive rate of 31.5% from 2013-2016. Western Digital and Seagate are two of the major players in this booming market. 

The global integrated circuit IC) market has also witnessed continued growth due to strong demand for ICs fostered by technological innovation, for which Thailand is a significant regional manufacturer. The country is home to global IC manufacturers such as ROHM, NXP, Hitachi and HANA. ICs were the country’s fourth-largest exports in 2016 (3.6%). With advanced assembly technology and excellent quality, ICs produced in Thailand are exported to serve high growth segments such as automobiles, electronics and smart devices. 

Investing for a stronger future

As the world is shifting to an era of interconnectivity, the Internet of Things (IoTs) will create new market trends and business models by linking data and producing improved products and services. According to PwC, in 2020, dynamic industries such as the consumer electronics, automobile, and health care segments will contribute more than 50% of IoT usage. The global IoT market is expected to reach THB 303.7 trillion (USD 8.9 trillion) in 2020. 

In utilizing the power of the internet to connect assembly and manufacturing machinery, office computers and devices, operators, suppliers, and customers, IoT can provide real-time data that will increase production, labor utilization, and output efficiencies.

Last year, Cisco collaborated with several local universities to introduce the Cisco Networking Academy, a global education initiative by Cisco Systems, which will offer networking courses to allow students to learn from IoT use cases. In ASEAN, Cisco has invested THB 340 million (USD 10 million) in a venture-capital fund focused on IoT and other emerging technologies.

Smart Electronics ascending to greater heights

In supporting the coordination of the flow of goods and related value-added information services such as tracking and tracing, supply chain management, and security related services, RFID (Radio Frequency Identification) technology is growing significantly together with the e-commerce and logistics industries. With RFID usage expected to improve operational efficiencies for traditional logistics processes such as transportation, growing online logistics platforms will drive RFID demand in Thailand as the value of e-   commerce increases to THB 2.45 trillion (USD 71.8 billion), a growth rate of 11.4% in 2014-2016. Demand for RFID technology is thriving in Thailand, with the market value increasing to THB 4.95 billion (USD 145 million) in 2016. The leading RFID producers in Thailand include Datamars, Stars Microelectronics, and Silicon Craft Technology.

In addition, global demand for 3D printing is expected to dramatically increase dramatically from THB 54.6 billion (USD 1.6 billion) in 2015 to THB 457.2 billion (USD 13.4 billion) in 2018, a growth rate of 103.1%. This strong demand is being driven by the aerospace, electronics, automotive, jewelry, education, and healthcare industries. Thailand is currently the largest consumer 3D printer producer in the world, accounting for 25% market share in 2016 with its complete supply chain and skilled labor. 

In-line with Thailand 4.0, the government has targeted Smart Electronics as one of the 10 S-Curve industries to move the country towards an innovation-driven economy. There are tremendous opportunities for companies to ramp up their competitiveness by focusing on innovation, value-added products, and technologies, given the country’s strong position in the E&E sector. 

Facilitating innovation, research, and development

Thailand Science Park (TSP), occupied by the National Science and Technology Development Agency (NSTDA) under the Ministry of Science and Technology, offers a fully-integrated R&D hub to support the R&D links between the government and private sector and to stimulate the creation of new technology businesses. Smart Electronics is one of the targeted research areas. Research units related to Smart Electronics include:

Thai Microelectronics Center (TMEC) – Aiming to be the center of microelectronics research and development in Thailand, TMEC is the first integrated circuit plant in the country. The center focuses on the application of prototype integrated circuits by providing training for educational institutions as well as companies in the industry. For example, sensors for modern agriculture, including humidity sensors and solar tracker sensors, were developed at the center to help farmers achieve better crop yields.

Thailand Organic and Printed Electronics Innovation Center (TOPIC) - Printed Electronics are used in the application of printing technology to create circuits and electronic devices. The well-developed application of graphene by the center attracted Haydale, a global technologies and materials company for nanomaterials, to conduct collaborative research of composites for lightweight aircraft wing coatings in Thailand.

Advanced Automation and Electronics Research Unit (AAERU) - The center focuses on Industrial Control and Automation for research and development of various types of automation systems in manufacturing, energy and environment, and the medical sector. Research in areas such as man-machine interface, CNC technology and motion control technology aim to help increase productivity and efficiency in Thailand’s industrial cluster. The other related unit is the Embedded System Technology center which focuses on the development of embedded control systems for applications in the agricultural, automotive, electronics and food industries. Core technologies such as Embedded System Platforms, Networking, and Wireless Sensor Networks will further support these industries in developing new and innovative products that will help strengthen the value chain for Thailand to better compete in the global arena. 

Thailand is heavily investing to be ready for the Smart Electronics era. The country’s E&E strengths and relevant support by different government agencies will give it an important boost in securing its position in this major targeted industry.



 
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