Samsung announces $3b smartphone factory in Vietnam
Samsung has announced plans to invest up to $3 billion to develop a new smartphone factory in Vietnam. The facility will operate alongside Samsung’s existing $2 billion plant in the country, which began production in March 2014.
Samsung is not the only tech firm with manufacturing facilities in the country. Intel, LG, Panasonic and Microsoft have all opened plants in recent years, marking a shift away from China.
Experts say the combination of tax breaks and a relatively cheap workforce make the country an appealing base when compared with its northern neighbor. Vietnam's government had previously said Samsung's smartphone assembly lines would not need to pay corporate taxes for four years, and only half the normal rate for the following nine years should the firm meet the terms set out in its investment applications.
Vietnam positioning itself as a leading smartphone manufacturer
Vietnam is becoming somewhat of a smartphone giant. In the first 10 months of the year the country exported $19.2bn worth of mobile telephones and accessories, which is 8 percent more than for the same period in 2013, according to Vietnam's General Statistics Office.
The sector currently accounts for about 16 percent of the nation's total exports, which makes it bigger than the textile and garment industry.
According to reports, Samsung will build its new smartphone factory close to its existing plant in the north-eastern province of Thai Nguyen, which currently employs in the region of 16,000 workers.
The announcement comes a month after Samsung Electronics announced plans to build a $560m factory in Ho Chi Minh City, where it will make televisions, washing machines and air conditioners.
Other divisions from the South Korean company are also expanding in the country, including Samsung Display and Samsung Electro-Mechanics. According to the Yonhap news agency, the conglomerate as a whole has invested about $11bn to date in Vietnam.
IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.