After Samsung's Vietnam mobile phone business declines, the government requires the local chip factory to be built

 

【Lansheng Technology Information】According to news on September 4, due to the sharp decline in Samsung’s smartphone shipments in Vietnam and South Korea’s foreign direct investment in Vietnam, the Vietnamese economy has been hit hard. The Vietnamese government has asked Samsung to build a semiconductor factory there.

According to reports, Samsung Vietnam is already a major manufacturing and export base for its smartphones, with half of its production produced in Vietnam, but Counterpoint Research data shows that in the first quarter of this year, shipments of "Made in Vietnam" mobile phones fell by 23.1% year-on-year, leading the "Made in Vietnam" Samsung, which shipped "Made in Vietnam" phones, was the biggest contributor to the decline - Samsung's Vietnam shipments fell by 22.5%.

Separately, Korea International Trade Association data showed South Korean foreign direct investment in Vietnam fell 67.6% year-on-year to US$670 million in the first five months of this year.

Faced with Samsung's lax smartphone business, the Vietnamese government asked Samsung to build a semiconductor factory there.

Statistics show that Samsung is currently the largest foreign investor in Vietnam and has four subsidiaries in Vietnam, namely Samsung Electronics City in Ho Chi Minh City, Samsung Electronics Vietnam and Samsung Display Vietnam in Bac Ninh Province, Samsung Electronics Vietnam Taiyuan in Taiyuan Province, Manufactures smartphones, home appliances, parts, etc. 

In the first quarter of this year (2023), the revenues of these four subsidiaries all declined, and SEHC’s revenue fell by 23.3% year-on-year to US$1.15 billion—the largest decline. The total profit of the four Vietnamese subsidiaries was US$1.08 billion— It was down 18.4% year-over-year, with SEVT seeing the biggest decline - down 69.3%.

According to Nikkei Asia, the revenue of Samsung Electronics Vietnam Branch in the second quarter of this year fell by 27.1% compared with the same period last year to 4.3 trillion won. to 447.4 billion won.

Cui Zhouhu, general manager of Samsung (Vietnam), once said that Samsung has invested 20 billion U.S. dollars in Vietnam since 2008 and has invested 20 billion U.S. dollars in Vietnam by 2022. It still plans to invest 1 billion U.S. dollars in Vietnam every year. more than 100,000 workers have created employment opportunities, Samsung factories in Hanoi, Ho Chi Minh City, Bac Ninh, and Taiyuan have more than 100,000 managers and employees, and Samsung has 257 Vietnamese suppliers in the global supply chain, with an investment scale of 2.2 The billion-dollar Samsung (Vietnam) Research and Development (R&D) Center has also been put into operation by the end of 2022.

Just in August 2022, according to the Vietnam News Agency, when Samsung Electronics CEO Lu Taiwen met with Vietnamese Prime Minister Fan Mingzheng during his visit, he announced an additional investment of 3.3 billion U.S. dollars in Vietnam to continue to expand its business in Vietnam. Taiyuan Province has tested and produced FC-BGA high-performance semiconductor packaging substrates, and plans to officially start mass production in July 2023.

At that time, in August 2022, it was also reported by Vietnamese media Lao Dong that Samsung planned to start producing chips in Vietnam in mid-2023, expand Vietnam’s semiconductor chip production layout, and was planning the production conditions for wafer trial production. Vietnam's Thai Nguyen factory mass-produces chips, and the Vietnam R&D Center will be the main R&D base of Samsung in Southeast Asia.

The Prime Minister of Vietnam requested that Samsung Electronics research and expand the production of semiconductors, one of the three pillars, in Vietnam. "Samsung has already carried out efficient business in the field of smartphones and home appliances. Semiconductor production will form a closed chain of electronic product production in Vietnam." 

It is worth mentioning that according to data from Vietnam’s Ministry of Planning and Investment (MPI), although from 1988 to the end of May 2023, South Korea was the largest foreign investor in Vietnam with 9,666 projects worth US$81.5 billion, followed by Singapore (3,240 projects, worth US$73.384 billion) and Japan (5091 projects, worth US$69.628 billion), but the latest data show that in the first eight months of this year (2023), Vietnam has attracted more than US$18.1 billion in overall foreign investment, an increase of 8.2% year-on-year, but Capital increase funds fell sharply year-on-year - down 39.7%.

In addition, starting from 2020, Singapore has become the largest foreign investor in Vietnam for three consecutive years. In the first eight months of this year (2023), Singapore continues to rank first with a total investment of more than US$3.8 billion—accounting for 21.2% of Vietnam's total investment Above, but a year-on-year decrease of 15.4%, mainland China's investment in Vietnam increased by 90.8%, with a total investment of nearly 2.69 billion US dollars, accounting for 14.8% of the total investment-ranking second, followed by Japan and South Korea.

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