Samsung Electronics to Open Third Factory in Vietnam... Hunger for De-Sinicization

Samsung Electronics is planning to build an additional mobile phone plant in Vietnam.

According to Samsung Electronics by management of Samsung Electronics plans to visit Samsung Electronics in Yen Binh, Thai Nguyen province (SEVT), Vietnam from the 29th to the 31st to approve the construction for its third mobile phone plant. If the plant is completed after approval of construction, Samsung Electronics will have three mobile phone production plants in Vietnam, operating two in Yen Binh, Thai Nguyen province and one in Yen Phong, Bac Ninh province. Bac Ninh province did not have much free space hence the expansion in Thai Nguyen province.

Currently, Factory 1 and Factory 2 in Vietnam individually produces 120 million mobile phones each year. Although the production capacity of the new plant has not been confirmed, it estimates that it will be between 60 million and 120 million units per year. For example, Noida's mobile phone plant in India that was completed in July, investments were 800 billion won for 60 million units and 1.6 trillion won for 120 million units.

The reason behind the construction of a new mobile phone plant in Vietnam is de-sinicization. The company is continuing to reduce production volume in China due to the cost burden caused by rising labor costs and falling shares in China.   

Samsung Electronics has production facilities for mobile phones in Tianjin and Huizhou, China. It has been confirmed that the Tianjin plant produces very little new supplies and it is expected to withdraw soon. Huizhou's plant is also planning to gradually reduce production volume.

The Vietnamese government's strong request is also one of the reasons why Samsung Electronics decided to invest in its third plant.
"After Samsung Electronics announced its plan to expand its mobile phone plant in India, Vietnam has been encouraging investments by offering a variety of advantages (tax breaks) and encouraging investments." said a Samsung Electronics representative.

The third factory in Vietnam will produce medium and low-priced phones, that have been stopped in China and will be shipping it to Southeast Asia, South Korea, and China. It will also manufacture products that will target the Indian markets. To increase competitive edge in production cost, sales volume in China is supplied through ODM (Original Design Manufacturer). China's BYD is producing components that cover the back of Samsung Electronics' Smartphones. Recently, there has been news that a Chinese company called Wintech is outsourcing Samsung Electronics' low-priced smartphone Galaxy A6s. Wintech is a company that outsources Chinese Xiaomi's Smartphones.