Samsung plans Vietnam plant, encouraging idea that Vietnam could be next China
Is Vietnam the next China? Recent investment suggests it could very well be.
Electronic Business began posing that question last fall after Vietnam entered the World Trade Organization and a string of electronics companies announced investments in the country. Of note is Intel, which in 2007 announced it would put $1 billion into Vietnam or an assembly-and-test house that will be the company’s largest backend IC plant worldwide, and STMicroelectronics, which opened its Hanoi, Vietnam, location in November. A group of Silicon Valley executives also got into the act last year and unveiled a $200 million assembly and test startup, Vietnam Chipscale Advanced Packaging Services, planning a 300,000-square-foot facility that is expected to employ 1,500. And Korea’s Samsung Electronics stated plans for a mobile phone factory that would in time turn out 100 million units annually.
Samsung, which has expressed interest in building a plant in Vietnam for more than a year now, has moved closer to that goal with reports out this month that the company will invest $670 million in the mobile handset plant to be located in northern Vietnam. The hold up is apparently because of some missing paper work, and it seems Samsung may still need to fill out some forms.
Meanwhile, Samsung’s strength in mobile devices continues to grow. The company shipped about 161 million handsets last year, half of which came from plants in Korea and half from other locations in China, Brazil, and India. The company shipped 113 million in 2006 and hopes to ship 200 million this year, if it can add production capacity. Samsung is currently number two in global mobile devices shipment rankings, besting Motorola and falling second only to Nokia.
Vietnam has many of the attracting qualities that once lured companies to China, the top most two being cheap labor and a location in the growing Asia Pacific marketplace. While China is unarguably a hot spot for electronics, its attraction is cooling. The country needs R&D investment if it wants to move from being more than a manufacturing capital to a fully armed powerhouse in the electronics supply chain, and its top companies admit this.
China also has a few strikes against it. If IP protection isn’t making headlines, counterfeit products and endangering product quality issues are. So it isn’t surprising that as Samsung adds production, it has elected to look to Vietnam. According to reports, once the Vietnam plant is up and running — projections estimate late in 2008 or early 2009 — Samsung will initially start production capacity at 30 million handsets per year.
Share your thoughts on Vietnam and its opportunities and challenges below.
–Suzanne Deffree, Managing Editor, News
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