Samsung Electronics is going to increase proportion of production of Smartphones in Vietnam next year from 30% to 40%, and this will have production amount in Vietnam surpass production amount in China for the first time. Samsung Electronics will also start producing household appliances such as TVs, ACs, refrigerators and others in Vietnam starting from next year. It seems that Vietnam will emerge as Samsung Electronics’ biggest production base that ranges over Smartphones and household appliances.
According to parts industries on the 10th, Samsung Electronics modified proportion of production of Smartphones in Vietnam to 40% and requested 10% more of supplies of parts from major parts industries than this year.
KB Investment & Securities is estimating that proportion of production of Smartphones in Vietnam that used to be in middle of 30% this year will increase to middle of 40% next year. It is predicting that Samsung Electronics will transfer amount of supplies in China to Vietnam and that proportion of production in China that used to exceed 40% will decrease to middle of 20%. It is as if advanced production base for Smartphones is changing from China to Vietnam.
Samsung Electronics is going to operate Consumer Electronics (CE) factories in Ho Chi-Minh Saigon Hi-Tech Park (SHTP) in Vietnam starting from 2nd half of 2016. It also requested supplies of parts from its partners according to schedule and will also produce other large-sized household appliances such as ACs, refrigerators and others at SHTP and not just TVs.
Intops, which has been working as Samsung Electronics’ partner in supplying cellphone cases, will invest $21 to $25.4 million (25 to 30 billion KRW) in SHTP to respond to production of household appliances. It will also build its own corporation in Vietnam with its fund of $15.2 million (18 billion KRW) and produce and supply cases for household appliances after it equips itself with large-sized catapult.
It is heard that Intops’ facilities not only can produce TVs, but it can also produce ACs, refrigerators, cases for washing machines and others. While a catapult for Smartphones has a size of 200 to 350 tons, a catapult for large household appliances has a size of 800 to 1,200 tons. It can be deduced that this kind of ejection pressure not only can produce TVs, but also large household appliances such as ACs and refrigerator.
Intops will operate its facilities sometime in July of 2016, which is about same time when Samsung Electronics’ production facilities will be finished and operated. It is going to finish designing facilities by January and finish construction by June.
Cheap personnel expenses and expansion of social overhead capital (SOC) can be seen as reasons why Samsung Electronics is expanding production in Vietnam. While China’s labor and tax systems are being more strict, Vietnam’s personnel expenses are still half of China’s. Fact that production system was prepared across the board as major partners’ production facilities entered Vietnam one by one had a major effect.
“Even though China’s personnel expenses went up $508 ~ $593 (600,000 ~ 700,000 KRW), Vietnam’s personnel expenses are still about $254 (300,000 KRW) when its wage is higher than before.” said a person from parts industry. “As Samsung Electronics decided to expand its production in Vietnam from Smartphones to household appliances, Vietnam has risen as next production base.”
“Although it is true that production facilities in Ho Chi-Minh will be finished by second half of 2016, exact items that will be produced and production amount are not decided yet.” said a person associated with Samsung Electronics. “How much production of Smartphones will increase by cannot be discussed either.”
Staff Reporter Song, Junyoung | songjy@etnews.com