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Samsung invests $850 million to build semiconductor factory in Vietnam

Latest update time：2021-12-26

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According to KBS, Samsung Electronics held a board meeting on the 23rd and decided to invest US$850 million to install flip-chip ball grid array equipment for manufacturing semiconductor chips at its production plant in Vietnam.

Flip chip ball grid array is a connection material that transmits electrical signals and power between semiconductor chips and motherboards.

Samsung plans to inject investment funds in stages from now to 2023, with the Vietnam factory as the main production base, while the factories in Suwon and Busan, Gyeonggi Province, South Korea will focus on core technology development.

Samsung is a leading company in the manufacturing of flip-chip ball grid array semiconductor chips (without memory functions) for mobile phone systems.

Currently, Samsung has a total of 6 production plants in Vietnam and is building a research and development center. Samsung's investment in Vietnam has reached more than 17.7 billion US dollars, and currently has about 110,000 employees. In 2020, the company's exports reached more than 56 billion US dollars.

Despite the severe and complex background of the COVID-19 pandemic, Samsung still achieved a growth of 10% from January to July. A representative of Samsung Vietnam said that if the company's factory in Ho Chi Minh City resumes production as planned, the company can exceed its export target for this year.

Samsung's R&D center in Hanoi is expected to be operational by the end of 2022, and is expected to contribute to the development of Vietnam's industry and information technology. It is expected that about 3,000 engineers will work here.

Vietnam’s semiconductor layout

Semiconductor is the main raw material for IC (Integrated Circuit). Conductive directional semiconductors are used to manufacture logic circuits so that the circuits can process information. IC designs and miniaturizes semiconductor devices and electronic component circuits and then manufactures them on the surface of semiconductor wafers to enhance the function of processing information. The IC industry chain includes integrated semiconductor factories from upstream wafer materials to IC design, IC manufacturing (wafer foundry), IC packaging and testing, and IDM (Integrated Device Manufacturers). In the early days, most of them were vertically integrated component manufacturing from IC design, manufacturing, packaging, and testing. Since the late 1980s, Taiwan has tended to a professional division of labor model as design and production have become more and more complex. To date, Taiwan's IC upstream and downstream industry chain has ranked second in the world in terms of complete design output value, second only to the United States. Taiwan ranks first in the world in terms of wafer foundry and IC packaging and testing output value. Taiwan accounts for more than half of the top ten professional packaging and testing companies in the world.

As for Vietnam, the Ho Chi Minh City People's Committee approved the Ho Chi Minh City IC development plan in 2012 and invested in the establishment of Saigon Semiconductor Technology Inc. (SSTI) in 2013, which aims to promote the development of the semiconductor and IC industries by cultivating IC enterprises and building manufacturing and design centers. SSTI is located in Saigon Hi-Tech Park (SHTP), Vietnam's first semiconductor wafer manufacturing and IC packaging and testing factory. It plans to set up a semiconductor R&D unit and an assembly and testing multi-functional center, including the upgrade and design modification of semiconductor manufacturing equipment and engineer training. In addition to meeting domestic demand, its products also promote the development of Vietnam's semiconductor industry.

At this time, the Vietnamese government has begun to promote the transformation and upgrading of the original labor-intensive traditional industries. The Vietnamese government is encouraging large-scale development towards technology-intensive semiconductor-related technology industries. At present, the upstream of Vietnam's IC industry chain includes Silicon Intellectual Property (SIP; IP for short) design and IC design, the midstream includes IC wafer manufacturing, related production process testing equipment, photomasks, chemicals, etc., and the downstream includes IC packaging testing, related production process testing equipment, components (such as substrates, lead frames), IC modules, IC channels, etc., except that the technicality of IC design and wafer foundry needs to be strengthened, the upstream materials, midstream components, downstream assembly and system product industry chains are complete, and electronics and related components have become Vietnam's largest export industry. According to the survey, the main factory projects that foreign investment has entered recently are printed circuit boards (PCB), connectors, camera modules and passive components. The semiconductor industry cluster has taken shape in North Vietnam, while the domestic consumer electronics industry cluster is mainly in South Vietnam. The rapid development of Vietnam's semiconductor industry will promote the transformation and upgrading of Vietnam's electronic assembly and manufacturing industries, create huge economic output and provide more employment opportunities.

According to expert assessment, Taiwan will receive transfer orders from global IDM factories in 2020, and Taiwan's advanced process and high-end packaging and testing semiconductor production and output value will still lead the world in the short term. It is expected that the market demand for semiconductor technology products will increase significantly. In addition, Vietnam has become the first choice for Taiwan's technology industry and mainland China to transfer production due to the US-China trade war. Therefore, the Vietnam factory of Taiwan Xuran Group officially entered mass production in the second half of 2020. Benefiting from the increase in demand for precision and filtration efficiency of liquid filtration in industries such as semiconductors, electronics, mechanical equipment and food chemicals, the deployment of the Vietnam factory will further deepen the export market in Southeast Asia, Europe and the United States.

As the global IC design industry is shifting its focus to the mobile device sector, Vietnam has also taken advantage of its geographical advantages of bordering mainland China to facilitate the import of materials and components, assembly, and processing economy, as well as the industrial chain formed by Japanese and Korean automobile manufacturers setting up factories in the local area, attracting major electronic manufacturers to enter Hanoi, Haiphong, Bac Ninh, etc. in northern Vietnam, aiming to replicate the capital-intensive, technology-oriented electronic technology industry clusters, and working towards the goal of building Vietnam into the next world factory.

According to Nguyen Anh Tuan, Chairman of the Ho Chi Minh City Semiconductor Industry Association (HSIA), the biggest challenge facing Vietnam's semiconductor industry is the lack of technical operators and supervisors. According to the Saigon Hi-Tech Park Training Center, Vietnam currently has more than 2,000 engineers, and the demand for high-end technical talents increases by at least 20% each year, but the supply is insufficient. In any case, Vietnam's IC and semiconductor turnover in 2019 was nearly US$200 million, and the market potential will provide huge investment opportunities for domestic and foreign companies. Vietnamese local companies are also more actively investing in the IC industry, including capacity expansion, mergers and acquisitions, etc., and this wave of continued active investment is expected to have a historic and far-reaching impact on the further development of Vietnam's semiconductor industry.

According to statistics, Vietnam's semiconductor industry is expected to reach US$6 billion in 2021, but it still lags behind other Southeast Asian countries due to limited supply of integrated circuit (IC) manufacturing. Although Vietnam's IC manufacturing is still in its early stages, the design aspect is well developed, with about 20 companies providing product design services.

In Vietnam, companies investing in the semiconductor industry are eligible for preferential policies, such as zero corporate income tax for the first four years, 5% for the next nine years, and 10% for the next 15 years, instead of the standard tax rate of 20%. In addition, industrial parks will provide 10% to 15% of training costs for semiconductor companies.

Vietnam's semiconductor industry is dominated by foreign companies. Intel leads the way, and other companies include Juki, Renesas, Esilicon, etc. Local players include Saigon Semiconductor Technology, Vietnam Microelectronics, and VSMC, etc.

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