Samsung Elec. to Build Handset Plant in Vietnam

Samsung Electronics on Friday will unveil a plan to build a large mobile phone plant in Vietnam with an annual production capacity of 100 million units. Samsung has been pushing for the plan over the past year under a strategy of building a global mobile phone production system.

The new plant will be built in Bac Ninh Province where Samsung has reportedly obtained land for the facility. Samsung aims to begin operating a first-stage plant with an annual production capacity of 30 million handsets either late this year or early next year. The company will then expand the factory gradually, with a view to raising its annual production capacity to 100 million units.

The decision to build in Vietnam is in line with Samsung's goal of reducing production costs to raise its price competitiveness in the international market. It considers Vietnam, with its industrious work force, a competitive production base because labor costs there are half what they are in China, the preferred production base of many multinationals.

Samsung apparently prefers Vietnam as it can export its handsets from there to rapidly growing markets in the region, such as Thailand, Malaysia and Cambodia, at lower tariff rates.

The planned factory in Vietnam also heralds a change in Samsung's worldwide handset production strategy. In 2007, Samsung Electronics produced a total of 160 million handsets, with about 80 million made in its South Korea plants and the other 80 million made in its overseas plants -- three plants in China, and one each in Brazil and India.

This year, with the new plant in Vietnam, Samsung will likely produce more handsets overseas than at home. Meanwhile, the company has set a total sales goal of 200 million handsets for this year.

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