Samsung May Have A Semiconductor Factory In Vietnam

Visiting Vietnamese President Nguyen Xuan Phuc will hold a summit meeting with Korean President Yoon Suk-yeol in Seoul today (5 December 2022), with plans to possibly have a Samsung semiconductor factory.

Source: Business Korea

The meeting will reportedly be graced by the heads of major Korean conglomerates such as Samsung, Hyundai Motor, LG and Lotte. A large-scale economic delegation was included in the Vietnamese delegation to Korea this time, so a deep discussion on business and investment cooperation is expected to take place through this meeting.

Samsung Electronics Chairman Lee Jae-yong is expected to participate in the meeting. Lee met with Vietnamese leader for three consecutive years from 2018 to 2020 when he was the Vietnamese prime minister. As Samsung Electronics is the largest foreign investor in Vietnam, a discussion on expanding investment in Vietnam is expected to take place at this meeting. In October 2020, Lee inspected the construction site of a Samsung R&D center in Vietnam and disclosed an investment expansion plan at a private meeting with then Prime Minister Phuc. The intention was along the lines of having a Samsung semiconductor factory.

The visiting Vietnamese president is highly likely to ask Lee to set up a semiconductor plant in Vietnam. Vietnam is seeking to attract investment from foreign chipmakers, who are affected by the recent U.S.-China conflict.

Vietnam already has the experience of attracting a factory from U.S. semiconductor giant Intel. Intel’s total investment in Vietnam alone is US$1.5 billion. Intel employs 2,800 people in Vietnam.

In particular, President Phuc already requested Lee to build a semiconductor plant in Vietnam three times — October 2018, November 2019 and October 2020. The industry has a reason to look forward to a new Samsung semiconductor factory.

Semiconductor industry watchers say that Vietnam is attractive in terms of eco-friendliness as well as labor costs. For Samsung Electronics, which announced a new environmental management strategy in September, Vietnam is a good candidate for increasing the use of renewable energy.

According to a survey by global energy think tank Ember, Vietnam raised the proportion of renewable energy above 10 percent for the first time in 2021. This means that Vietnam has a wide gap with Korea, which logged only 4.67 percent last year.

“Samsung Electronics will suffer a significant sales loss if it fails to meet the use of renewable energy demanded by overseas customers,” an industry insider said. “Overseas plant expansion holds the key to achieving RE100 and avoiding major countries’ protectionist trade barriers.”

It is also noteworthy that Samsung enjoys a close partnership with Vietnam. Currently, Samsung is running a total of six production corporations, one sales corporation, and one R&D center in Vietnam. As of June this year, Samsung Electronics’ total investment in Vietnam exceeded US$20 billion, about 30 times the US$607 million invested in Bac Ninh in 2008.

Meanwhile, Samsung Electronics will complete its Vietnamese R&D center, the largest in Southeast Asia, in Hanoi, Vietnam, at the end of December. The US$220 million center will have 2,200 employees and will focus on the development of mobile terminals, networks, and software. Lee is known to be considering attending the Vietnam R&D center completion ceremony at the end of this year.

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