Reciprocal Tariffs and Talent Bottlenecks are Driving Changes in PCB Investment in Southeast Asia

Estimated reading time: 6 minutes

As the global supply chain continues to restructure, Southeast Asia, leveraging its geographical advantages and favorable policies, has become a strategic hub for global circuit board manufacturing. Thailand, Vietnam, and Malaysia, in particular, are expected to have a combined PCB output value of US$8.6 billion in 2024, accounting for 10.8% of the global total, leveraging their respective industrial strengths and policy incentives. This demonstrates their enormous growth potential. However, the Southeast Asian PCB industry also faces challenges such as insufficient manufacturing capacity, talent shortages, and reciprocal tariffs imposed by the United States.

Thailand: A new PCB cluster is emerging thanks to significant investment from major Taiwanese and mainland Chinese PCB manufacturers.

Thailand's success in the Southeast Asian PCB industry stems from a mature electronics industry chain and continued foreign investment, particularly in the gradual establishment of mid- to high-end production capacity in rigid board manufacturing. While Thailand remains a net importer of PCBs and faces a widening trade deficit, reflecting that local production capacity is insufficient to meet the rapidly growing demand of the electronics industry, it is expected that with the continued investment from major Taiwanese and mainland Chinese PCB manufacturers, Thailand's collaborative role in the Southeast Asian supply chain will become increasingly prominent.

In terms of business layout, Taiwanese and Chinese companies generally focus on risk diversification and capacity expansion for mid- to high-end products, with applications spanning servers, automotive electronics, and communications equipment. Japanese companies, on the other hand, are focusing on the high-end automotive electronics market, strengthening their technological depth and quality advantages. According to the Industrial Technology Research Institute (ITRI), with the gradual opening of new production lines, Thailand's PCB output value will reach US$3.9 billion in 2025, an annual growth rate of 11.4%, accounting for 4.6% of the global market. The impact of Thailand's foreign investment policy adjustments on the international trade landscape remains to be seen.

Vietnam: Electronics assembly is growing strongly, but PCB manufacturing capacity still needs to be strengthened.

Vietnam has rapidly emerged as a global electronics manufacturing (EMS) hub in recent years, attracting international giants such as Samsung to establish a deep presence and establish a large assembly and manufacturing industry cluster. However, upstream PCB supply capacity is significantly insufficient, making Vietnam the country with the highest reliance on PCB imports.

According to data from the Industrial Technology Research Institute (ITRI), mainland China and South Korea are the main trading partners for Vietnam's PCB imports and exports, with Korean companies having a particularly significant influence. The Korean supply chain, centered around Samsung Electronics, has long been deeply embedded in Vietnam. For example, its key subsidiary, SEMCO, established an ABF substrate production base there, with mass production expected to begin in 2024. Furthermore, Taiwanese, Chinese, and Japanese companies have also entered the market, including MEIKO, Tripod, Chicco, Jiantao, and Victory Giant, focusing their product offerings on mid- to high-end applications such as substrates and servers. Vietnam's PCB production value is projected to reach US$3.4 billion by 2025, a 9.7% annual growth rate, accounting for approximately 4% of the global market.

Despite this promising outlook, Vietnam's industrial development remains constrained by infrastructure bottlenecks, particularly power shortages and the risk of power rationing. To enhance energy stability, the government launched the "PDP8 National Power Development Plan" in 2025, aiming to significantly increase the proportion of renewable energy and incorporate nuclear power into its long-term supply structure to support the sustainable development of the electronics manufacturing industry.

Malaysia: Strengthening its semiconductor advantages and establishing a hub for high-end substrate manufacturing.

Compared to Thailand and Vietnam, Malaysia has long been a key base for Southeast Asia's semiconductor industry, boasting comprehensive IC packaging and testing capabilities and a mature manufacturing equipment system. In addition to mainland China, Malaysia also steadily supplies to Singapore and Thailand, demonstrating its regional supply collaboration capabilities. This foundation gives Malaysia strategic potential for high-end PCB applications, particularly substrate manufacturing.

Although it is currently a net importer of PCBs and its domestic production capacity is insufficient to meet the massive demands of the local electronics industry, the Malaysian government has actively deployed industrial upgrades, launching a new round of semiconductor investment incentives starting in 2025 to attract more advanced manufacturing technologies and capital. Foreign companies such as Austrian giant AT&S have already invested heavily in Malaysia, building advanced substrate production capacity for applications in high-tech sectors such as AI servers and communications equipment. According to the Industrial Technology Research Institute’s (ITRI) International Institute, Malaysia's PCB output value is expected to reach US$2.2 billion in 2025, a 10.0% annual growth rate, accounting for 2.6% of the global market.

In response to the impact of US reciprocal tariffs, three Southeast Asian countries have launched a diversified response plan.

Since the Trump administration implemented the reciprocal tariff policy, it has put substantial pressure on economies whose export structure is highly dependent on the US market. Vietnam has already completed tariff negotiations with the US, responding by lowering tariffs on natural gas, automobiles, and ethanol. The newly announced tariff rate is 20%, but punitive tariffs of up to 40% will still be imposed on goods shipped through third countries. Meanwhile, Thailand and Malaysia face potential tariffs of 36% and 25%, respectively, but the tariff increase has been postponed until August 1st, leaving room for negotiation with the US. This has had a severe impact on the three countries' key export industries, such as electronics, auto parts, and solar panels, with Thailand being particularly affected.

The three countries are actively promoting strategies to reduce their dependence on the US and maintain export competitiveness. Thailand has formulated a 10-year trade restructuring plan to adjust its trade structure, reduce agricultural tariffs, strengthen certification of origin and energy cooperation, and reduce non-tariff barriers, aiming to establish a more flexible trade regime with the US. In addition to completing tariff concessions, Vietnam has also granted market access to SpaceX, expanding its high-tech industry, and diversifying its export markets. The country is actively expanding its participation in regional economic cooperation frameworks such as the RCEP and the CPTPP to enhance its global competitiveness. Malaysia has established a "US Tariff Response Task Force" to consolidate industry input and develop strategies to address tariffs, encouraging businesses to explore Middle Eastern and Islamic markets and reduce reliance on a single market. At the same time, the benchmark interest rate was adjusted by one basis point to stabilize working capital for export-oriented manufacturing industries.

Overall, facing the challenges posed by the US's reciprocal tariff policy, the three Southeast Asian countries are actively working through institutional adjustments, fiscal and tax incentives, industrial upgrades, and export market diversification to diversify their reliance on the US market and enhance their strategic position in the global supply chain.

Talent bottleneck: An invisible obstacle to industrial upgrading in Southeast Asia.

As Southeast Asia becomes a key hub for global manufacturing expansion, the supply of entry-level and technical labor is becoming increasingly tight. This not only poses risks to the stable operation of new production lines but also hinders capacity release and yield improvement, thereby slowing the pace of overall industry expansion.

To address this labor bottleneck, governments and businesses are actively promoting industry-academia collaboration, implementing executive rotation training programs, and strengthening local talent development and retention strategies to meet the needs of future industry growth. To this end, the Taiwan PCB Association, in addition to establishing a Thailand chapter, is collaborating with several Thai universities to develop industry-academia collaborations. The inauguration ceremony for the Thailand PCB Academy will be held in Bangkok on August 22nd of this year. This systematic approach will cultivate professional talent and provide solid support for the upgrading and sustainable development of the local PCB industry.

Strengthening PCB overseas operations strategies is key to success in Southeast Asia.

While Thailand, Vietnam, and Malaysia each possess distinct strengths in the PCB industry, energy supply, talent gaps, and reciprocal tariff policies all pose uncertainties to Southeast Asia's future competitiveness. When planning their Southeast Asian expansion, companies should assess supply chain maturity, talent and educational resources, and regional political stability, establish local leadership development mechanisms, and ensure production quality meets the requirements of global customers. If these challenges are effectively addressed, combined with policy support from various countries and integrated supply chains, Southeast Asia is expected to become an essential core node in the global PCB and electronics supply chain within the next decade.