From Financial Buzz
Adding on to their already enormous investments into the Southeast Asian country Vietnam; Samsung announced plans for a $3 billion smartphone manufacturing plant. This came shortly after the South Korean company announced plans for a $560 million factory to be built in Saigon, where it will house Samsung’s televisions, washing machines and air conditioners production operations.
A logo of Samsung Electronics. (JUNG YEON-JE/AFP/GettyImages)
Samsung’s aggressive expansion into Vietnam does not come as a surprise to shareholders and investors as manufacturing costs in China continues to increase. This coupled with Vietnam’s tax breaks, and extremely cheap workforce makes the location ideal for large-scale manufacturing operations.
Some of Samsung’s competitors include Intel (NASDAQ: INTC), LG and Microsoft (NASDAQ: MSFT) who have already expanded operations into Vietnam in recent years. In a previous agreement with the Vietnamese government Samsung’s costs associated with their assembly lines will not be subjected to corporate taxes for the next four years and the next nine years following the initial four-year term. Samsung will be held accountable for only half the normal tax rate as long as Samsung meets all of the terms in their investment agreement.
Samsung intends the new $3 billion facility to be built close to their already-existing $2 billion factory that is located close to Vietnam’s capital of Hanoi in the province of Thai Nguyen. The existing factory began production operations back in March and currently employs nearly 16,000 workers.
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