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Shares of electronic component makers in Thailand saw their share prices rise after a long-subdued period of gloomy outlook after the United States announced that it had undertaken a ‘trade deal’ with Vietnam which would see Vietnam’s reciprocal tariff be at 20% against the 46% initially imposed on April 2, 2025, announcement by US President Donald Trump.
Shares of electronic component makers across the board on the Stock Exchange of Thailand (SET) rose on July 3 amid hopes that Thailand, which is negotiating with the United States at the current moment would likely get a ‘sweeter’ deal than that of Vietnam.
Shares of electronic component makers such as
- Delta Electronics (Thailand) Plc (DELTA) rose by 4.8%
- Hana Microelectronics Plc (HANA) 5.4%
- KCE Electronics Plc (KCE) 7.4%
- SVI Plc (SVI) 5.3%
The surge in the price of these companies came despite the Thai Baht was stronger, something that is considered to be negative to such companies because it makes their export less competitive.
Sontanawoot Ratchatrakul, sector analyst at TISCO Securities, said that there were various reasons for the surge in the share prices and among them are that most of these companies are trading at a very low price-to-earning (PE) ratio with the exception of DELTA.
Secondly, he says that the imposition of 20% tariff on goods from Vietnam to United States as per the trade deal, and the 40% levy on ‘transshipment’ are things that likely to be implemented in the deal with Thailand as well.
This means that the local producers are going to benefit while those just setting up shops to repackage the product and ship it out would be penalized with higher tariff.
“We believe this approach will extend to Thailand; also known as a transshipment hub, which would improve/level the competitiveness of legitimate local manufacturers versus those that set up operations in Thailand solely for rerouting, repackaging, or to obtain a Thai label with minimal local value-added (e.g. <40% local content),” Sontanawoot said in a note to clients.
“Ultimately, Thai electronic makers stand to benefit from further relocation if tariff disparities favor Thailand.”
But he cautioned on what the retaliation would be from China for countries that align themselves too much with the United States, adding that all this could create a supply disruption.
This would likely create more disruption because Thailand has seen a massive influx of investment from Chinese and Taiwanese printed circuit board (PCB) manufacturers over the past 5 years.
These companies have established significant production bases, positioning Thailand as ASEAN’s top PCB hub-largely to circumvent steep U.S. tariffs on Chinese goods.
However, this strategy now carries substantial risk, as the U.S. intensifies its crackdown on transshipment. Sontanawoot sayd that he believes many of the new Thai facilities still rely heavily on raw materials and key components imported from mainland China.
According to Thailand Printed Circuit Association (THPCA), Thailand was accounted for 4% of global PCB production capacity in 2023 but expected to increase significantly to 10% within 3-5 years as global PCB player continue expanding their investment in Thailand – there were 95 projects of PCB-associates with total investment of Bt160bn have been applied for investment promotion during January 2023 to September 2024.
