Biz/Tech

Samsung to Build Smartphone Factory in Vietnam

Nov 10, 2014 09:30 AM EST | By Staff Reporter

Samsung Electronics announced plans to shell out $3 billion to build a new smartphone factory in Vietnam.

The proposed factory in Vietnam would operate along with another $2 billion plant the company already has a foothold in the country which began its operation just recently in March.

Intel, Panasonic, LG and Microsoft's unit are among the other companies that have put factories in Vietnam over the past years.

Vietnam is becoming the place of choice in terms of building products since it has lower taxes and relatively cheap labor which make it appealing to tech companies--this marks a shift away from China.

"In a way China is a victim of its own success - it's becoming so successful as an economy that it's becoming too expensive to do a lot of the manufacturing it used to attract," said Daniel Gleeson, a senior analyst at the IHS Technology consultancy.

"A lot of the manufacturers run at extremely tight margins. Even smallish cost savings by relocating to Vietnam versus China can represent a substantial competitive advantage, and driving down costs can be paramount.

The government of Vietnam is not imposing stricter tax ruled and said that the tech giant would need to pay corporate taxes for four straight years, and be given only half the normal rate for the following nine years if the company abides by the terms set out in in its investment application.

Vietnam's exporting industry is a booming business, having exported $19.2 billion worth of mobile phones and accessories from January to October this year-up by 8 percent compared to last year's outputs, as reported by Vietnam's General Statistics Office.

Meanwhile, Samsung also plans to build a $560 million factory in one of the country's major cities, Ho Chi Minh to make TVs, air conditioners and washing machines.

Other Samsung divisions are also planning to expand to the country, including Samsung Electro-Mechanics and Samsung Display.

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