Will Samsung set up a third smartphone facility in Vietnam?

If a third Samsung facility is built, Vietnam will be involved more deeply in Samsung’s huge supply chain, according to Nguyen Van Toan, deputy chair of the Vietnam Association of Foreign Invested Enterprises (VAFIEs).

Thelec quoted its sources as reporting that Samsung would set up another smartphone plant in Vietnam.

This would be its third smartphone production facility if the plan is implemented. It reportedly would replace plants in China that will stop operation.

The plant may focus on making low-cost and medium-range products for South East Asian, South Korea and India.

“This is really good news for Vietnam,” said Toan. He said it was very difficult to predict where Samsung would place its third plant.

The investment expansion by a giant like Samsung will bring big benefits. Most importantly, analysts see the possibility of Vietnamese enterprises taking part more deeply in Samsung’s supply chain.

“The increase of one or a few percent of Vietnamese enterprises’ presence in the chain would also be significant,” Toan said.

Vietnamese enterprises have been criticized for their low production capability and have not been able to join multinational corporations’ supply chains.

However, analysts said that Vietnamese enterprises’ capability has improved considerably thanks to their great efforts and Samsung’s goodwill.

Vietnam now has 29 companies which are first-class vendors to Samsung. It had only four in 2014. The figure is expected to rise to 50 by 2020.

Nikkei media said that companies, after exploiting technology transferred by Samsung, would be able to join other industries and form local supply chains.

However, Toan said, though the number of first- and second-class vendors has increased, Vietnamese enterprises still cannot approach high technologies.

Meanwhile, Chinese manufacturers can master and develop new technologies very rapidly which allows them to create ‘made-in-China’ products competitive with foreign products.

The expert in FDI said that Vietnamese enterprises have no other choice than to upgrade and take full advantage of Samsung’s training to develop. In addition, they must have enough capital to buy technologies.

“Vietnamese enterprises need to master technologies and upgrade them regularly,” he said.

Samsung has invested $17 billion in Vietnam, and its factories in the country have generated 160,000 jobs.

In related news, a foreign newspaper quoted You Seung-min from Samsung Securities as saying that North Korea may replace Vietnam to become a major smartphone and screen production base.

A representative of Samsung Vietnam declined to ‘comment about rumors and personal predictions’.

According to a report on Vietnamnet

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