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2024년 12월 19일The Industrial Revolution technology that began in England in the mid-18th century to the early 19th century brought about many changes in society, economy, and human life through innovation and new manufacturing processes. At that time, the technology of the Industrial Revolution was the technology that obtained energy by steam engines, and from the 1870s, the technology gradually changed to electric energy.
In the 1970s, the rapid development of the automobile industry led to the development of the automobile and heavy industry industries through robots, and from the early 2010s, smart factory technology connecting various IT technologies was introduced.
As of 2024, the primary industrialization (steam engine) has ended and the secondary, tertiary, and quaternary industries coexist.
Smart factory technology, including IoT, Big Data, and AI, is developing into a fundamental industry that can advance the industrialization of a country worldwide, and Vietnam, which has a relatively abundant IT workforce and production, manufacturing, and assembly experience, has also begun introducing smart factories through overseas and domestic companies since the early 2010s.
Elements that make up a smart factory
The core of smart factories is “ data collection – analysis – prediction .” In order to build a smart factory, it is essential to first collect data generated on-site. Each factory and industrial site has sensors or on-site equipment that can measure current, vibration, temperature, and production volume. These are digitalized and converted into data, and the data is stored and analyzed on the company's server or cloud through the company's internal network (Wi-Fi, network equipment).
This data is linked to the MES, which processes real-time data, or the ERP system, which has functions such as finance, accounting, purchasing, and HR necessary for factory operation and management after data processing is complete.
Typically, smart factories collect, transmit, and analyze data through these processes, as well as provide “predictions” of production volume, sales, etc. based on the collected and refined data.
Vietnam Smart Factory Industry Led by Foreign Companies
Smart factories in Vietnam are led by overseas companies. In the early 2010s, global companies from the United States and Europe expanded their production facilities to China and Southeast Asia. Despite the cheap labor in Vietnam at the time, the background for introducing smart factories was the standardization of production by global corporations.
Coca-Cola of the United States built Coca-Cola production plants in Hanoi, Ho Chi Minh City, and Da Nang from 2013 to 2016, while GE (General Electric) built a smart factory in Hai Phong, Vietnam.
Europe's Bosch is operating a smart factory manufacturing plant centered on automotive parts and high-tech products by introducing advanced German technology to the Long Thanh Industrial Park in Vietnam. In addition, other European companies such as ABB (Switzerland), SIEMENS (Germany), and Henkel (Germany) have been leading the construction and operation of smart factories in Vietnam since the early 2010s.
In Korea, Samsung Electronics has built production facilities for mobile phones and displays in the Bac Ninh and Thai Nguyen regions of northern Vietnam with advanced manufacturing technologies, robots, and automation systems, and is expanding them based on the latest IoT, AI, and Big Data.
LG Electronics has built a smart factory centered on the LG Display and LG Innotek factories in Hai Phong, northern Vietnam.
Vietnam-led smart factory industry
The Vietnamese government has issued Decision No. 569/QD-TTg on the “Strategy for the Development and Innovation of Science and Technology until 2030”, with a plan to prioritize the development of automation technology.
According to Ericsson Group, more than 67% of global manufacturing hubs are expected to be located in the Asia-Pacific region by 2025, and Vietnam is well-positioned to attract significant FDI thanks to the 16 FTAs it currently has in place.
The smart factory industry is closely related to not only the introduction or construction of technology, but also the government's urban development plan, real estate development, etc., and is therefore carried out in parallel with the creation of industrial complexes and social indirect investment projects led by the government or state-owned enterprises.
Accordingly, the Vietnamese government is providing large-scale state- and private-sector-led projects and incentive benefits to companies, such as the construction of smart factories in the Bac Linh and Hai Phong industrial parks in the north , and Dong Nai, Long Thanh , and Binh Duong provinces in the south.
In particular, in the Binh Duong region of Vietnam, the state-owned Vietnamese company Becamex is planning to build a smart factory and smart city model based on industrial real estate and urban development planning, IT and data center construction and operation. In particular, in order to support the digital transformation of the manufacturing industry, we are collaborating with overseas companies and establishing, supporting, and operating the EIU (Estern International University) for talent cultivation in the Binh Duong region.
Vietnam-led smart factories began with the establishment of the Vinamilk Mega Factory in Binh Duong, southern Vietnam, by the Vietnamese company VINA Milk in 2013. At that time, the core technology, robotics, was provided by LG in Korea, and Schafer in Germany provided logistics and warehouse management systems and IoT technology. Although it was a smart factory established by a Vietnamese company, it passed major international standards such as ISO, GMP, and FSSC, and in 2019, it became the largest milk factory in Southeast Asia with an investment of 10 million USD.
This smart factory project in Vietnam will rapidly develop as the beginning of the Vietnamese automobile industry. In 2018, Vietnam's Vingroup acquired GM Vietnam's state-of-the-art robotics facility in Hai Phong, northern Vietnam, to produce Vietnam's first automobile, VinFast, and will produce Vietnam's first electric car starting in 2022.
THACO in southern Vietnam also assembles Kia, BMW Mini, Mazda and Peugeot cars in Vietnam based on its smart factory facility in 2018.
In addition, POSTEF , a subsidiary of Vietnam VNPT, established a fiber optic communication cable manufacturing and R&D center in Bac Ninh, northern Vietnam, in 2019 with the support of the Ministry of Science and ICT of Vietnam, and Sunhouse, a Vietnamese plastic household goods manufacturer, built a plastic factory in eight industrial parks in Vietnam, including Hanoi, in 2019. (For reference, Sunhouse uses Korean MES, ERP, MPS, and MRP products.)
Future Outlook for Vietnam Smart Factories
Starting around 2010, Vietnam Smart Factory is causing a great wave of change in manufacturing based on industrial robots, IoT, AI, and big data, and is influencing various industries in Vietnam. This is similar to the platform business of a huge ecosystem where one business creates another business.
However, some argue that smart factories are still premature, given Vietnam's low labor costs and the urgency of automation.
According to the Vietnam Automation Association (VAA) survey data, when classifying the level of smart factory automation into 7 levels, most Vietnamese enterprises are operating automation processes at levels 3 to 5. This means that many local Vietnamese enterprises have still achieved limited automation. In addition, industrial robots and production lines that are involved in automation depend on overseas imports.
However, we expect that the positive aspects, such as the Vietnamese government's strong promotion of the 4th industrial revolution, continuous capital investment from foreign companies, and the influx of young IT talent into society, will gradually improve the concerns.
Vietnam IT Blogger, CEO of TechValley Vietnam
Technical inquiries : patrick@techvalley.biz | go2hanoi (KakaoTalk)
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