South Korean companies are expanding their investments in Vietnam beyond simple assembly operations to include semiconductors, advanced materials, and energy infrastructure. Recent investments signify a shift not only in scale but also in the types of products and roles these companies are pursuing. Moving away from a focus on mobile phone assembly and labor-intensive production, investments are now targeting semiconductor backend processes, display materials, package substrates, and power infrastructure for AI industrial complexes.
According to recent reports from local Vietnamese media, South Korean firms have been announcing new investments and factory construction schedules in Vietnam. While past investments were concentrated on labor-intensive sectors such as garment manufacturing, footwear, and mobile phone assembly, the current trend is shifting towards high-value areas like semiconductor backend processes, display materials, and essential components.
Samsung, as the largest foreign direct investor in Vietnam, has expressed its commitment to further investment. Park Soon-cheol, Samsung Electronics' Chief Financial Officer, met with Ngo An Tuan, Vietnam's Minister of Finance, on July 2 to discuss business and investment plans in Vietnam. During this meeting, Samsung announced plans for approximately $1 billion in new investments by the end of the year.
As of the end of last year, Samsung's cumulative investment in Vietnam reached $24 billion. The company currently operates six factories and a research and development center in the country, indicating its intention to continue long-term investments through its subsidiaries, including Samsung Electronics, Samsung Display, and Samsung Electro-Mechanics.
Additionally, Douyin Systems, a supplier for Samsung Display, is expanding its production base for ultra-thin glass (UTG), a key material for foldable phones. On July 8, Douyin Systems held a groundbreaking ceremony for its second factory in the Song Cong II Industrial Park in northern Thai Nguyen Province. The second phase of investment amounts to $130 million, bringing the total investment for both phases to $250 million. Ok Kyung-seok, CEO of Douyin Systems, stated at the ceremony, "The construction of the second factory is a proactive investment in anticipation of future UTG market expansion." This investment exemplifies the company's efforts to enhance its production capacity for key materials linked to the foldable phone market.
LG Innotek is also advancing its semiconductor package substrate project in Hai Phong. In March, LG Innotek announced plans to invest a total of $1 billion in a factory in the Nam Dinh Vu Industrial Park in Hai Phong. The site covers an area of 323,812 square meters, equivalent to 43 soccer fields. The Hai Phong City Committee approved this project on July 3 as the first project in the Hai Phong Free Trade Zone. Local media reports indicate that with LG joining the ranks of Intel, Amkor, and Samsung, the semiconductor supply chain in Vietnam is becoming more robust.
SK Innovation is accelerating its investments in Vietnam's energy infrastructure. In May, a consortium involving SK Innovation, Vietnam's state-owned power company PV Power, and local partner NASU announced the launch of the $2.3 billion Kien Lap LNG (liquefied natural gas) project in the Tan Mai area of Nghe An Province.
This project aims to establish a 1.5 GW LNG combined cycle power plant and LNG terminal in the Kien Lap area, located about 220 kilometers south of Hanoi. The goal for commercial operation is set for December 2030. SK Innovation described this project as a realization of the "specialized energy-industrial cluster" proposed by the SK Group to the Vietnamese government. The electricity generated at the plant will be supplied to nearby advanced industrial complexes, and the project plans to implement a "Korean-style AI full-stack" value chain to support the industrial advancement of Vietnam.
Investment Focus Shifts from Scale to Product Types
The key aspect of the recent investment trend is the change in product focus rather than just the amount of investment. While South Korean investments in Vietnam have been substantial for some time, there is now a noticeable shift from assembly and low-value production to semiconductor backend processes, display materials, essential components, and energy infrastructure.
LG Innotek's package substrates are in high demand due to the growing need for AI servers, while Douyin Systems' UTG is directly linked to the foldable phone market. SK Innovation's LNG project aligns with plans to establish industrial infrastructure that includes advanced industrial complexes and AI data centers. Locally, South Korean investments are seen as part of the expansion of the semiconductor ecosystem in Vietnam. The country, once viewed as a labor-intensive production base, is transitioning into a supply chain hub that includes design, verification, and packaging.
Notably, LG Innotek's investment strategy illustrates the division of roles between South Korea and Vietnam. The company has designated its facility in Gumi, South Korea, as a mother factory responsible for new technologies and high-value products, while the Hai Phong facility in Vietnam operates as a mass production base for general products. The semiconductor substrate line in Gumi is currently operating at near maximum capacity.
In this structure, new product development and high-complexity processes are handled domestically, while mass production to meet demand is carried out in Vietnam. If high-value processes and research and development functions remain in South Korea, it could impact technology accumulation and the retention of key jobs. However, as mass production continues to shift overseas, the role of domestic production bases is inevitably changing.
Meanwhile, South Korea maintains its status as the largest foreign investor in Vietnam. As of May, Choi Young-sam, South Korea's ambassador to Vietnam, reported that South Korea's cumulative investment in Vietnam has reached $101 billion. Last year, the number of mutual visitors between the two countries exceeded 5 million, and trade volume reached $89 billion.
* This article has been translated by AI.
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