Samsung to set up semiconductor packaging line in Viet Nam

In particular, as there are large-scale lines such as Samsung Electronics mobile phones and Samsung Display in the region, it is analyzed that it is a strategy to maximize the synergy effect. The government plans to support this and at the same time drive the export of the ‘K-industrial complex’.

The burden of enforcing the global minimum tax… Packaging line favors local government incentives

According to the government on the 21st, it was understood that Samsung Viet Nam is considering promoting the establishment of a packaging factory in the country. The site has not yet been confirmed, but it is said that the area around Bac Giang Province, where Foxconn, the largest subcontractor that makes Apple iPhones, is located, is the most probable.

Earlier this month, Samsung Electronics Chairman Lee Jae-Yong had a meeting with Prime Minister Pham Minh Chinh, who is third in the power hierarchy in Viet Nam, who visited South Korea. On this occasion, Chairman Lee emphasized that “as the largest foreign investor and the largest exporter in Viet Nam, we will always accompany Viet Nam,” and Prime Minister Chinh reportedly requested Samsung to attract investment related to the semiconductor industry.

Another reason Samsung is looking to set up a packaging line in Viet Nam is related to the “global minimum tax” issue that was introduced this year. This is a system that grants additional taxation rights to multinational corporations if the income of a multinational corporation is taxed at an actual rate lower than the minimum tax rate (15%) in a particular country.

Samsung receives various incentives at the central and local government levels in Viet Nam, and the corporate tax rate is also applied at the lowest (5% level). It seems likely that they will bear most of the tax burden due to the introduction of the minimum tax immediately, but they can expect to benefit from the “incentive package” (Viet Nam’s Ministry of Planning and Investment) through the packaging factory.

United States and Viet Nam upgraded to the highest ‘Comprehensive Strategic Partnership’… Ministry of Land, Infrastructure, and Transport Outlook on the Speed of Overseas Exports for ‘K-Industrial Complexes’

Samsung Electronics operates an overseas packaging line in Suzhou, People’s Republic of China. Unlike DRAM and foundry (semiconductor contract manufacturing) plants, semiconductor packaging is less concerned about leakage of core semiconductor technologies, and the fact that the United States and Viet Nam upgraded their bilateral relations to the highest level of “comprehensive strategic partnership” last year is also cited as a factor that eases the burden on Samsung to invest overseas.

Samsung Electronics produces more than 50% of its global smartphone volume in Viet Nam. Viet Nam the largest FDI (foreign direct investment) company in the region, accounting for about 20% of the country’s total exports, and is expanding its investment by opening a large-scale R&D (research and development) center in Hanoi in 2022.

The Korean government will take the opportunity of Samsung Electronics to establish a semiconductor packaging line in Viet Nam to begin exporting K-industrial complexes in earnest. The Ministry of Land, Infrastructure, and Transport is currently working on land supply and construction near Hanoi for Korean companies to enter the local market.

Last month, Minister of Land, Infrastructure, and Infrastructure Park Sang Woo met with the heads of local subsidiaries of major conglomerates such as Samsung and LG in Viet Nam and said, “Viet Nam is expected to grow the fastest among ASEAN countries and is a young country with an average age of 32.5 years old.”