Thailand PCB industry is growing

Thailand is not the first country that comes to mind when you think of rising high-tech players but the reality is that increasingly Thailand is becoming a big player in high tech. In Hard Disk Drive manufacturer, Thailand is number two globally with four of the five biggest players all with factories in Thailand. The same is happening in the printed wiring board (PWB) or printed circuit board (PCB) sector where Thailand is becoming a bigger and bigger player.

Why is Thailand becoming such a large player in this field, in the manufacture of Hard Disk Drives, ICs and other components? The answers are many.

First, Thailand has had a longer time to put its infrastructure in place than many of the other Asian Nations with which it competes. Its government is stable and very pro-business. The government and in particular the Government Board of Investment (BOI) and Ministry of Commerce have been very proactive not only about identifying incentives to attract these companies but also the follow-on policies to encourage the companies to expand and bring in satellite industries.

Also, there is a range of supporting industries that is often not found even in China and certainly nowhere else in Southeast Asia that support successful operation.

Finally, the economics of the country make sense for investment. Thailand’s wage level for general workers is about the same as that in China. Although China often looks cheaper at first-glance, the reality is different as many manufacturers have learned by experiencing increased VAT and other charges.

In addition to these more obvious factors, Thailand also has a few things not so easily observed without considerable study. For example, a further benefit for PCB and other component industries considering Thailand has been Thailand’s growing role as the “Detroit of Asia”. As components for consumer electronics have become a more and more competitive field, Thailand’s surging automotive production has allowed Thai electronic plants to branch into automotive electronics such as PCBs for ABS, dashboard, car stereo, etc. and now such auto products often are between 30-40% of production.

This is not to say that Thailand has yet solved all the problems. What’s holding Thailand back?

First, Thailand’s PCB market is small compared to the market in China. However, since most large Thai PCB makers were founded to take advantage of export sales, the small market doesn’t deter them from expanding.

Second, the infrastructure to support manufacturing equipment for the PCB or component industry is still weak in Thailand with a few exceptions. Most supplies and materials must be imported although this could be changing as two of the country’s largest board makers.

Further, if final products are sold and used in Thailand, it is required to pay duty on imported equipment and materials. This however is again mostly a minor issues as most PCB makers have sought and been granted Board of Investment (BOI) support incentives such as those exempting them from paying duties on imported items and that require them to export all products.

Further, if PCBs or other components are sold to local electronics companies, it is considered an export sale as long as the final products are exported. This rule is similar to the one followed in China.