Vietnam is the world's smartphone factory.

July 19, 2015 13:25

Vietnam is becoming a global smartphone manufacturing hub as more manufacturers are expanding operations there. Smartphone makers are taking advantage of low labor costs and incentives from the Vietnamese government.

US company Microsoft has moved production to a factory in northern Vietnam from two closed facilities in China. Meanwhile, South Korea's Samsung Electronics will spend $4 billion to increase the production capacity of its factories in the country by the end of 2015. LG Group opened a new $1.5 billion factory in Vietnam last March.

Samsung has factories in Thai Nguyen and Bac Ninh provinces. The company will expand capacity at the Thai Nguyen factory. After increasing capacity, the two factories will be combined to boost exports from 21.7 billion USD in 2014 to 32 billion USD in 2015.

The company's capital investment is aimed at expanding production of the Galaxy smartphone that is taking the world by storm.

Samsung began operations in Vietnam in 2009. Samsung is considered one of the largest foreign companies in Vietnam. Currently, the company has hired 100,000 Vietnamese workers, and with additional investment, it is expected to employ many more workers.

Cheap labor costs

Microsoft has closed factories in Beijing and Guangdong (China), moving production to a factory in Bac Ninh (Vietnam). The company acquired a factory in an April 2014 deal to sell Nokia phones.

"Microsoft will turn Vietnam into a major smartphone production base," a company official told local media.

Việt Nam đang trở thành một trung tâm sản xuất điện thoại thông minh của thế giới bởi vì nhiều nhà sản xuất đang mở rộng hoạt động tại đây

Photo: source Nikkei

LG Group began producing smartphones and consumer electronics at a new factory in Hai Phong city in March. The company sells 30 percent of its products at the Vietnam plant and exports the rest to more than 30 countries.

In the first half of 2015, 107.3 million smartphones and mobile phones were produced in Vietnam, up 68.8% from a year earlier. Annual production is likely to exceed 200 million units. Most of the goods are exported.

Labor costs in Vietnam are only half of those in China (Shanghai and Guangzhou). In addition, there are many skilled young people in Vietnam looking for jobs.

The Vietnamese government has offered incentives to attract smartphone and mobile phone manufacturers, such as halving corporate tax and land rents.

According to Vietnamnet

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Vietnam is the world's smartphone factory.
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