Samsung vendor to build new factory in northern Vietnam

SR Tech, a Samsung vendor, plans to build a four-hectare factory in the northern province of Thai Nguyen, a senior executive said Friday.

You Soo Don, CEO of SR Tech, announced the plan for the new factory at a meeting with Thai Nguyen Chairman Trinh Viet Hung. He said SR Tech considered Vietnam in general and Thai Nguyen province in particular a key investment destination of Samsung’s supply chain.

The company will cooperate with the province in training a high-quality workforce, exercising corporate social responsibility and promoting innovation towards green and sustainable development, he added.

Thai Nguyen Chairman Hung welcomed the plan and asked the provincial industrial zone authority to help SR Tech and relevant agencies process the project.

He also highlighted Thai Nguyen’s strengths in industrial development, including seven industrial parks, 41 industrial clusters, the availability of 6,000 hectares for industrial facilities, and nine universities and 27 colleges that train 15,000-20,000 graduates every year. So far, 170 FDI firms have registered to invest $10 billion in the province.

Vietnam’s index of industrial production (IIP) showed signs of a recovery with year-on-year growth of 2.8% in June, but fell 1.2% year-on-year in the first six months of this year, the General Statistics Office (GSO) reported.

Bucking a national trend, Thai Nguyen’s IIP grew 4.14% year-on-year in the first six months of this year, including a 3.92% increase in June, according to provincial data.

However, the northern province has also acknowledged challenges including slow growth of the global economy impacting consumption demand, firms’ limited access to credit and high prices of input materials and energy.

Thai Nguyen is home to two Samsung subsidiaries. One of them, Samsung Electronics Vietnam Thai Nguyen (SEVT), earned revenues of KRW8,617.6 billion ($6.62 billion), down 18.5% year-on-year, in the first quarter of this year, according to the South Korean tech giant's interim business report. SEVT’s profit in the same period fell 69.3% to KRW296 billion ($227.43 million).

The other subsidiary, Samsung Electro-Mechanics Vietnam, which operates a factory in the province’s Yen Binh Industrial Park, recorded a post-tax profit of KRW43,481 million ($33.8 million) last year on a sales revenue of KRW1,975.1 billion ($1.54 billion), according to the parent firm’s financial statements.