Samsung invests $920 million more in Vietnam, but plans to reduce smartphone production
South Korea’s Samsung Electronics will invest $920 million in a production facility in northern Vietnam, government officials of the country said on February 16.
The investment will be made through Samsung’s components manufacturing arm Samsung Electro-Mechanics Vietnam and will increase the company’s total investment in Vietnam to $2.27 billion.
Plans are to expand Samsung’s production of printed circuit boards and other phone components, such as touch sensors, camera modules, linear motors and lenses, in Thai Nguyen province north of Hanoi.
Samsung has grown to Vietnam’s biggest foreign investor and exporter, with two smartphone factories employing a total of 6,600 people – apart from the facility in Thai Nguyen another one in Bac Ninh province northeast of Hanoi which additionally manufactures supply parts for Apple. Samsung also operates electronic factories in Saigon Hi-Tech Park in the south of the country where some 7,000 workers make TVs and household appliances such as fridges and washing machines.
Vietnam accounts for 60 per cent of Samsung’s overall smartphone production
The smartphone factories together had an annual capacity of around 180 million units as of last year, accounting for 60 per cent of Samsung’s total smartphone production.
Vietnam, a manufacturing powerhouse, has become an increasingly crucial part of the global technology supply chain. It has drawn interest and investment from companies such as Intel, Foxconn and LG seeking to diversify their production and reduce their exposure to China, and because of its relative success in containing the spread of the Covid-19 pandemic.
However, the pandemic has also shown how vulnerable Samsung is to supply chain disruptions by relying too much on a single source country. The company faced unprecedented supply chain stoppages starting in May 2021, when Vietnam’s deadliest Covid-19 wave hit and reduced production capacity by up to 40 per cent.
Production relocation to South Korea, India and Indonesia
Although production has stabilised with most workers in Vietnam having been vaccinated, it is expected that Samsung will not further expand its presence in Vietnam for the time being. It even relocated parts of its Galaxy smartphone production back to South Korea recently.
Overall, Samsung is planning to spend $140 million for a production diversification plan in its smartphone business, namely $90 million in India and $50 million in Indonesia. Once the restructuring is complete, Vietnam will account for 50 per cent of Samsung’s smartphone production, while India will account for 29 per cent – up from 20 per cent – and Indonesia for six per cent as compared with four per cent previously.
[caption id="attachment_38236" align="alignleft" width="300"] Samsung's smartphone factory in Vietnam's northern Thai Nguyen province[/caption] South Korea's Samsung Electronics will invest $920 million in a production facility in northern Vietnam, government officials of the country said on February 16. The investment will be made through Samsung’s components manufacturing arm Samsung Electro-Mechanics Vietnam and will increase the company’s total investment in Vietnam to $2.27 billion. Plans are to expand Samsung’s production of printed circuit boards and other phone components, such as touch sensors, camera modules, linear motors and lenses, in Thai Nguyen province north of Hanoi. Samsung has grown to Vietnam's biggest foreign...
South Korea’s Samsung Electronics will invest $920 million in a production facility in northern Vietnam, government officials of the country said on February 16.
The investment will be made through Samsung’s components manufacturing arm Samsung Electro-Mechanics Vietnam and will increase the company’s total investment in Vietnam to $2.27 billion.
Plans are to expand Samsung’s production of printed circuit boards and other phone components, such as touch sensors, camera modules, linear motors and lenses, in Thai Nguyen province north of Hanoi.
Samsung has grown to Vietnam’s biggest foreign investor and exporter, with two smartphone factories employing a total of 6,600 people – apart from the facility in Thai Nguyen another one in Bac Ninh province northeast of Hanoi which additionally manufactures supply parts for Apple. Samsung also operates electronic factories in Saigon Hi-Tech Park in the south of the country where some 7,000 workers make TVs and household appliances such as fridges and washing machines.
Vietnam accounts for 60 per cent of Samsung’s overall smartphone production
The smartphone factories together had an annual capacity of around 180 million units as of last year, accounting for 60 per cent of Samsung’s total smartphone production.
Vietnam, a manufacturing powerhouse, has become an increasingly crucial part of the global technology supply chain. It has drawn interest and investment from companies such as Intel, Foxconn and LG seeking to diversify their production and reduce their exposure to China, and because of its relative success in containing the spread of the Covid-19 pandemic.
However, the pandemic has also shown how vulnerable Samsung is to supply chain disruptions by relying too much on a single source country. The company faced unprecedented supply chain stoppages starting in May 2021, when Vietnam’s deadliest Covid-19 wave hit and reduced production capacity by up to 40 per cent.
Production relocation to South Korea, India and Indonesia
Although production has stabilised with most workers in Vietnam having been vaccinated, it is expected that Samsung will not further expand its presence in Vietnam for the time being. It even relocated parts of its Galaxy smartphone production back to South Korea recently.
Overall, Samsung is planning to spend $140 million for a production diversification plan in its smartphone business, namely $90 million in India and $50 million in Indonesia. Once the restructuring is complete, Vietnam will account for 50 per cent of Samsung’s smartphone production, while India will account for 29 per cent – up from 20 per cent – and Indonesia for six per cent as compared with four per cent previously.
