In 2009, Vietnam's electronics exports were worth $2.8 billion, a tenth of the size of Thailand's. Last year they had reached $37.3 billion, compared with Thailand's $33 billion.
Vietnam's lower wage costs - the minimum wage there is around $6.35 a day compared with $9.14 in Thailand, according to the Kasikorn Research Center - and the government incentives to lure producers are behind its appeal. Microsoft, Canon and Intel have all set up facilities there in recent years.
Thailand's electronics industry has been looking at ways to reinvent itself.
Thai Delta Electronics said in October that it had produced electronic converters for hybrid cars for the first time, complementing Thailand's still relatively strong auto sector.
But economists say this is not enough, and while it is trying, the country is not as nimble as other low-cost economies to adapt to newer types of technology.
Thailand's innovation ranking in the World Economic Forum's Global Competitiveness Index, fell to 67 in 2014 from 33 in 2007.
"When you look at the context of the continuous decline, you see there is a structural competitiveness problem that has been eroding Thailand," said Santitarn Sathirathai, senior economist of Credit Suisse in Singapore.
That means hopes Southeast Asia's second-largest economy can achieve an expected long-term average growth rate of around 4.5 percent to 5 percent a year are likely to be dashed.
"Going forward, the new normal for Thailand growth is probably more around 3.5 percent, that is the signal we take on the continuous decline in the industrial sector," said Santitarn.