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Samsung: Building a New $3 Billion Smartphone Plant in Vietnam

November 10, 2014 - Written By Cory McNutt

In what could be a huge coup for Vietnam, Samsung is looking to continue expansion in the country to the tune of another $3 billion to build a new smartphone plant in the same North Vietnam Thai Nguyen province where it opened a $2 billion smartphone plant in March.  A government official made this announcement today and said, “We are working on the project.” This confirmed an earlier report by Dau Tu, a newspaper controlled by Vietnam’s Planning and Investment Ministry.  The official was not authorized to speak on the matter and declined to be identified, but said, “There are still a few things to fix.”

A Samsung spokesperson told our source that they were in talks with Vietnam’s government about the expansion, although the schedule and amount of actual spending have yet to be decided.  It will benefit Samsung as they can reduce production costs to better compete with the many Chinese devices currently being sold.  Samsung Display Co Ltd, one of Samsung’s many subsidiaries, received approval to build a $1 billion display module only plant in the country.  The new $3 billion plant would bring Samsung’s total investment in Vietnam to $11 billion according to the ministry that oversees foreign investment.

Vietnam’s economy would certainly benefit from the move as mobile phones and their accessories became Vietnam’s biggest cash earner last year – finally taking over from the textile industry.  Samsung’s first $2 billion smartphone plant in Vietnam generated $1.9 billion in export revenue in just the first four months it was operating…not bad at all.  Just in January through October this year, export revenue reached $19.2 billion or about 15-percent of the country’s total.  Though the export revenue estimate was at $8 billion for 2014, the government expects it to jump to $13.4 billion in 2015…up 67-percent.

Samsung is spending, expanding and investing as though it had a banner year in 2013 – but the old adage that you have to spend money (wisely) in order to make money, may apply to Samsung’s business strategy as they cope with increasing competition in emerging nations and smartphone saturation in the highly developed countries.  This move keeps manufacturing close to home, yet gives Samsung a more competitive edge to sell to China and India where there should be some real growth in the next few years.

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