Samsung Vice Chairman Lee Jae-yong recently discussed expanding his firm’s local production capacity with Vietnamese Prime Minister Nguyễn Xuân Phúc earlier this week.
During a meeting, Nguyễn reportedly asked Lee to build another semiconductor plant in his nation. In response, the billionaire said his employer would make Vietnam a “key post” for its research and development efforts.
Samsung’s Vietnamese Manufacturing Resources
Like many electronics companies, Samsung outsources the manufacture of many of its products. The conglomerate has established multiple manufacturing plants in Vietnam to produce its home appliances and smartphones. In fact, the firm produces 120 million mobile devices annually at its Thai Nguyen province factories,
Having poured $17 billion into the area, the corporation is the country’s largest foreign investor.
Samsung recently expanded its holdings in the region by breaking ground on a new $220 million research and development center. Once operational, the complex will employ between 2,300 to 3,000 people and will be the biggest facility of its type in Southeast Asia.
Economist Nguyễn Minh Cuong told Vietnam Insider the electronics giant likes investing in the Republic because it suits its needs. To ensure production and logistics stability, the company needs affordable labor, quality workers, and favorable economic conditions. Vietnam has all of those qualities.
Given these benefits, Samsung is comfortable concentrating its manufacturing capabilities in one overseas locale.
How Samsung Would Benefit from Opening a Vietnamese Semiconductor Factory
Samsung should build a semiconductor fab in Vietnam to make itself more resilient to disruption.
Although it makes many products in Vietnam, the conglomerate does not make most of its electronic components there. At present, it manufactures its chips in four South Korean facilities, two Chinese complexes, and one Texas-based plant.
Prime Minister Nguyễn reportedly told Vice Chairman Lee that opening a semiconductor factory in his country would give Samsung a complete overseas production chain.
In light of recent events, that would not be a bad thing for the smartphone manufacturer.
Earlier this year, Vietnam played a key role in helping the electronics titan maintain its global operations during the coronavirus outbreak. After several workers contracted the ailment, the firm temporarily shuttered its main domestic handset plant. But it compensated by tasking its Southeast Asian facilities with producing premium mobile devices intended for its home market.
Because of a recent government initiative, Samsung is in the process of localizing its component supply chain. But with its market capitalization exceeding $300 billion, it could afford to build a Vietnam chip-making complex. Given the region’s robust capability and political neutrality, the move would likely pay off for the corporation in the future.