Thailand: A Global Leader in Air Conditioner Manufacturing and Export

Thailand has positioned itself as a vital global manufacturing center for air conditioners. The country produced an estimated 19 million units in 2024, making it the third-largest exporter of air conditioners worldwide, after China and Mexico. Export revenues reached US$ 7.044 billion in 2024 — a 9 percent increase over 2023. More than 21 million units of window or wall air conditioning systems were shipped to key markets, with the United States accounting for 35 percent of Thailand’s air conditioner exports, followed by Europe (25%), ASEAN countries (20%), Australia (10%), and Japan (10%).

In terms of export product mix, split units constituted 65 percent of total exports, window units 25%, and VRF systems 10 percent. Thailand’s air conditioner production volume has steadily increased from 18 million units in 2020 to 21 million in 2023, underscoring the country’s consistent industrial capacity.

To understand what powers Thailand’s rising export numbers, it’s essential to look at the brands behind the output and the government incentives that support them.

Major players and policy incentives

Major manufacturers benefit from Thailand’s strategic location and infrastructure within the Eastern Economic Corridor (EEC), home to key industrial clusters. Rayong hosts over 3,075 factories and employs approximately 196,526 factory workers in HVAC and related sectors. Chonburi, where Laem Chabang port is located, and Chachoengsao further support the industrial ecosystem.

Leading players include Mitsubishi Electric, Daikin, LG, Haier, and Midea. Daikin leads the market with substantial local production, while Mitsubishi Electric holds a significant share in both residential and commercial segments. LG, Haier, and Midea have notable footprints, especially across product types catering to both domestic and export demand.

Thailand’s HVAC manufacturing sector is projected to grow at a CAGR of 8.5% from 2024 to 2030, fueled by global demand for energy-efficient and smart systems. To support this, the Thai government offers various Board of Investment (BOI) incentives: up to 15 years of corporate income tax exemptions, duty-free imports of machinery and raw materials, and exemptions for R&D-related goods. These policies have helped cement Thailand’s role as a preferred manufacturing and export hub in the global air conditioner industry.

Approximately 70–80 percent of components used in air conditioner manufacturing are sourced domestically, with only high-tech parts like sensors and circuit boards imported.

While the global export story is compelling, Thailand’s domestic market plays an equally important role in sustaining its manufacturing ecosystem.

Local demand still matters

While Thailand is an export powerhouse, its domestic air conditioner market — valued at over THB30 billion — also shows consistent growth. In Q2 2024 alone, 1.75 million units were sold locally. Demand is driven by Thailand’s hot and humid climate, growing urban populations, and evolving consumer preferences for energy efficiency and smart technology.

Market segmentation and product mix

A closer look at how the domestic market is structured reveals key demand segments and product preferences that influence what gets produced. The domestic market is segmented into residential, commercial, and industrial categories:

• Residential: Valued at US$1.02 billion in 2024, projected to grow at a 5.8 percent CAGR through 2030.
• Commercial: Estimated at US$520 million, growing at a 6.5 percent CAGR.
• Industrial: Though smaller at US$180 million, this segment is growing fastest with a 7.2 percent CAGR.

In terms of product type:

• Split systems dominate with 65 percent of sales.
• VRF systems account for 20 percent.
• Window units hold 10 percent, and portable units comprise the remaining 5 percent.

The role of leading manufacturers

Understanding which companies lead in both manufacturing and brand strategy helps explain how Thailand maintains its competitive edge.

Japanese and Korean companies such as Mitsubishi Electric, Daikin, and Panasonic maintain a strong foothold in Thailand, collectively shipping around 1.2 million units annually. Daikin has leveraged its local manufacturing base to meet both domestic and international demand efficiently.

Korean brand LG, along with Chinese entrants like Haier, Midea, and Xiaomi, competes across various price segments and product categories.

Thailand’s role as a manufacturing base allows these companies to serve both Thai consumers and global markets from a single hub, reinforcing the country’s strategic importance in the HVAC supply chain.

Smart technology and the role of Chinese brands

Thailand’s transformation into a smart air conditioner manufacturing hub is being accelerated by the strategic involvement of leading Chinese brands. Haier, Midea, and Xiaomi are contributing to a broader trend of technology-driven disruption in the HVAC industry—each leveraging a different angle in the Thai market.

Haier achieved sales of 11 billion baht in Thailand in 2024, marking a 22 percent increase from the previous year. It is investing 13.5 billion baht in a new smart air conditioner factory in Chonburi, which will produce six million units annually — 85 percent of which are designated for export. Midea has similarly expanded its footprint, operating a 200,000-square-meter air conditioner factory in Chonburi with a planned annual capacity of four million units. The company aims to double its 2023 performance, targeting 3.8 billion baht in sales in Thailand in 2024.

Xiaomi, while not yet manufacturing air conditioners in Thailand, is disrupting the consumer segment through its value-for-money smart offerings. The Mijia Pro model—featuring AI controls, self-cleaning functionality, and integration with smart home ecosystems—has resonated with tech-savvy Thai buyers. Xiaomi reported a 63 percent year-on-year increase in air conditioner shipments in Q1 2024, reaching 690,000 units, and is projected to ship over seven million globally by year-end, claiming an 11.5 percent share of the retail market.

These developments show how Thailand’s robust manufacturing ecosystem and evolving domestic market are attracting major international players that are reshaping the competitive landscape with smart, connected air conditioning solutions.

Pricing landscape and consumer preferences

As consumer expectations evolve, pricing and preferences are becoming central to how brands position their products and manufacturing strategies.

Thailand’s air conditioner pricing can be broadly categorized into three tiers. Low-end models, typically priced between THB 10,000 and 15,000 (US$300–450), offer basic cooling functionality and appeal to budget-conscious consumers. Mid-range units, which cost between THB 20,000 and 30,000 (US$600–900), balance performance and affordability, often including features such as inverter technology and enhanced energy efficiency. Premium models exceed THB 40,000 (US$1,200+) and are equipped with advanced filtration systems, IoT connectivity, and superior energy-saving capabilities.

Across all segments, consumer preferences are shifting toward inverter technology, smart controls, and energy-efficient systems, in line with global trends.

Sales channels and digital reach

To support these product strategies, companies are optimizing their sales channels — particularly through Thailand’s booming digital economy.

Retailers like Power Buy, HomePro, and Big C dominate offline sales. However, e-commerce is playing a growing role, especially for mid-range and smart AC models. In 2023, Thailand’s digital economy reached a Gross Merchandise Value (GMV) of approximately US$39 billion, reflecting a 26 percent year-on-year growth. This expansion underscores the increasing reliance on digital platforms for appliance purchases, particularly air conditioners. Online flash sales, influencer marketing, and direct-to-consumer strategies allow brands like Xiaomi and Haier to effectively target younger, tech-savvy buyers who prioritize value, convenience, and smart features.

Regulatory trends supporting innovation

Thailand’s environmental regulations are becoming stricter, with authorities encouraging low-GWP refrigerants and higher energy efficiency standards. This regulatory environment supports innovation in product design and gives locally manufactured, eco-friendly units a competitive edge in export markets.

Challenges to address

Despite its strengths, Thailand’s air conditioner industry faces several pressures. These include rising competition that compresses profit margins, the need to constantly upgrade products to meet regulatory standards, and increased consumer expectations for smart features and sustainability. Additionally, the industry must navigate labor shortages in key manufacturing zones and rising wage costs, particularly in Rayong and Chonburi where most factories are concentrated. Thailand also faces mounting regional competition from countries like Vietnam and Indonesia, which are enhancing their industrial capacity and offering competitive investment incentives to attract HVAC manufacturers.

Strategic outlook

Taking all these factors together — production, demand, innovation, and policy — what does the future hold for Thailand’s air conditioner industry?

The country’s dual role as a manufacturing powerhouse and growing consumer market for air conditioners places it in a unique position within the global HVAC industry. With a strong export rebound, supportive policies, and growing digital retail infrastructure, the country is well-positioned to attract further investment.

Companies that localize production, innovate around regulatory trends, and tap into Southeast Asia’s rising demand stand to benefit most. Thailand is not just cooling homes — it is heating up as a center for air conditioning innovation and supply.

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