Samsung picks Vietnam, pulls plug in Thailand

Samsung Electronics, the world’s largest TV maker, has halted TV production in Thailand to streamline operations and focus resources on countries with more promising opportunities, according to multiple international and local media outlets.

Many see the move as benefitting Vietnam, where labor costs are cheaper than Thailand. Vietnam is also closer to China-based suppliers.

Earlier this week, the company broke ground for construction of its third factory in Vietnam, which will mainly produce TVs.

As part of a $1.4 billion project, the tech powerhouse will invest $560 million in the first phase to build a consumer appliances complex in Ho Chi Minh City.

Built on a 70-hectare lot in the Saigon Hi-Tech Park, the factory is expected to start production from the second quarter of next year, the company said. It will be responsible for producing high-end smart TVs. Later, assembly lines for washers and refrigerators could be added.

When the media reported that Samsung planned to set up a new factory for consumer electronics in Vietnam, analysts predicted that it would move home appliance production from Malaysia and Thailand.

What’s more, Samsung Electronics’ Visual Display division has struggled in Thailand for the past few years.

The home appliance factory is the latest in a string of investments Samsung has made in Vietnam.

The company already has two factories in the northern provinces of Bac Ninh and Thai Nguyen. But existing plants specialize in mobile phones, tablets and microprocessors.

When the company built the second handset production line, it invested $2 billion and will hire some 40,000 local workers by the end of this year. Samsung Electronics has so far shelled out $11 billion in different types of investment in Vietnam.

As Chinese manufacturers are rapidly catching up with the tech giant with their own products, the company must cut costs in manufacturing around the globe.

Samsung subsidiaries that supply parts to Samsung Electronics and other partner companies also made inroads into Vietnam.

Samsung Display received approval from the Vietnam government last year to build a $1 billion display module assembly plant in Vietnam, its first production facility in the country.

The company said it plans to start production at the plant in Bac Ninh province sometime in 2015.

Displays used in smartphones and tablets will be produced.

Samsung Electronics is a major contractor of Samsung Display and owns 85 percent of its shares. The decision appears to indicate Samsung Electronics’ broader strategy of focusing on Vietnam.

LG Electronics, the No. 2 TV maker, opened a new production base in Vietnam on Friday to manufacture key consumer electronics products for export to Southeast Asia.

Located in Haiphong, the factory allows for cheaper production of electronics such as TVs. LG plans to invest $1.5 billion in the complex through 2028.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]