With Trump in the ascendent, a renewed Western exodus from relationships with Chinese electronics manufacturers seems likely. Here’s why South East Asia may prove a good alternative for OEMs seeking reliable and strategic EMS outsourcing partners beyond the Asian tiger.
With the new president installed - and talking tough on tariffs, companies are now trying to secure their supply chains and manufacturing relationships away from the influence of a potentially toxic US vs China trade war.
But, even as Trump rattles his sabre and encourages companies to bring their facilities back to the US, it may not be possible for Western companies to completely reshore their existing relationships.
So, it’s worth considering whether other overseas options remain viable.
Over the past decade, Southeast Asia has steadily grown into a global electronics manufacturing powerhouse. Abundant labour, favourable government policies, and a strategic geographical location have made the region an attractive destination for Western companies seeking to outsource electronics manufacturing, optimise costs, access new markets, and maintain quality standards.
When it comes to politics and trade, Southeast Asian countries have a strong track of record pragmatic deal-making that may spare them and their partners the flack from Trump’s war on China.
In this case, outsourcing to ASEAN may be the best option for EMS companies, particularly given the rich capabilities and skill sets that exist there.
Countries like Vietnam, Malaysia, and Thailand are attractive alternatives due to their competitive labour costs, strategic geographic locations, and improving infrastructure.
Source: Asean Briefing
And, indeed, they proved the perfect place for companies who moved away from China during Trump 1.0:
The first Trump administration saw a notable flight of investment away from China, with multinational corporations relocating production to these Southeast Asian hubs to hedge against U.S.-China trade tensions. A second Trump term could further accelerate this trend, potentially leading to increased FDI in ASEAN as companies seek to diversify their manufacturing bases.
Source: Asean Briefing
With all these pressures at play, many Western businesses may be actively considering outsourcing their electronics manufacturing to Southeast Asia for the first time.
So, here’s a look at the top destinations, their specialities, and considerations for choosing the right partner.
Vietnam has experienced rapid growth in its electronics manufacturing sector over the past few years. A combination of relatively low labour costs, government incentives for foreign direct investment, and improving infrastructure make Vietnam an appealing choice for many electronics companies.
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Long known for its automotive and industrial manufacturing expertise, Thailand has also become a hub for electronics assembly and printed circuit board (PCB) production. Its established manufacturing ecosystem, strategic location, and growing emphasis on high-tech industries make it a natural choice for many companies.
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Malaysia boasts a well-educated workforce, especially in electronics, thanks to its long-standing experience in semiconductor and electronics assembly. The country offers political stability and well-developed infrastructure, making it a favourite among companies seeking both quality and reliability. Companies operating in Malaysia are
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With the largest population in Southeast Asia, Indonesia has enormous growth potential. While it may not be as mature as Thailand or Malaysia in electronics manufacturing, it’s rapidly catching up due to recent infrastructure investments, growing domestic demand, and an abundance of labour. Its focus is on low cost, high volume, low mix production, but standards f quality and reliability are good.
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Known primarily for its service-oriented outsourcing (like customer support and IT services), The Philippines also has a notable electronics manufacturing sector, particularly in semiconductors and electronic components.
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It’s tempting to focus solely on labour costs, but the quality of production, reliability of suppliers, and level of technological expertise are equally critical. Workmanship errors can end up costing more in the long run.
Proximity to major ports, ease of transportation, and robust infrastructure play a key role in timely delivery and reduced shipping costs. Each country has varying degrees of infrastructure development - factoring this into your choice is essential.
It’s not just about finding a contract manufacturer. You’ll also need reliable suppliers for components, packaging, and logistics services. Clusters of electronics manufacturers often benefit from co-location with component suppliers, reducing lead times and enhancing operational efficiency. It should be noted, that some EMS in the region are part of global, end-to-end outsourcing companies that can bring the full power of their internal supply chains to streamline your entire process.
Many Southeast Asian countries offer tax breaks, reduced tariffs, and other incentives to attract foreign investment. Familiarising yourself with local regulations, labour laws, and import/export rules can help you maximise these incentives.
Seamless communication is paramount for ensuring that design specifications and quality standards are met. While English is commonly used in many parts of Southeast Asia, the extent of fluency can vary. Establishing clear communication channels and protocols is key.
IP protection laws and enforcement vary across the region. Countries like Malaysia and Thailand often have stronger legal frameworks, whereas others may still be developing robust IP protection measures. Ensure you have clear contracts and legal recourse established with partners.
Outsourcing electronics manufacturing to Southeast Asia can offer significant advantages in terms of cost reduction, scalability, and market access. Vietnam, Thailand, Malaysia, Indonesia, and the Philippines each provide unique strengths, whether it’s labour availability, a skilled workforce, or advanced infrastructure. The best fit for your company will depend on your product requirements, budget, logistical needs, and long-term strategic goals.
Before you commit, it’s always wise to visit each potential location, conduct thorough due diligence on your shortlist of manufacturers, and engage local experts or consultants who understand the nuances of each market.
With the right partner and careful planning, outsourcing to Southeast Asia can be a catalyst for innovation, global expansion, and sustainable growth in the competitive electronics industry.