Samsung Electronics is set to significantly expand its footprint in Vietnam with a proposed $1.5 billion (39 trillion dong) investment in a new semiconductor testing plant. This strategic move aims to alleviate the global shortage of memory chips, a crisis exacerbated by the exponential growth in demand fueled by artificial intelligence applications.

Construction has reportedly commenced on the facility, located in an industrial park approximately 60 kilometers north of Hanoi. The plant is anticipated to commence operations by November 2027, according to proposal documents reviewed by Reuters. This marks Samsung's first dedicated chip testing facility in Vietnam, a country that is increasingly becoming a crucial hub for the semiconductor industry's back-end operations.

The new plant will focus on testing 'legacy' chips – older generations of memory chips that, while not as critical for cutting-edge AI infrastructure, are also experiencing severe supply constraints. Major chip manufacturers are prioritizing production capacity for AI-centric chips, leading to a squeeze on these mature memory components essential for products like smartphones, laptops, and automobiles.

According to the proposal submitted for environmental permits, the plant is projected to achieve an annual capacity of 153.3 billion gigabits of dynamic random-access memory (DRAM) chips and an additional 255.6 billion gigabits of NAND memory chips. Details regarding the precise investment figures, production capacity, and timelines have not been previously disclosed.

This significant investment was reportedly approved by Vietnamese authorities in March. The proposal also indicates Samsung's intention to reinvest profits, potentially up to $2.5 billion, for a possible second factory, signaling a long-term commitment to its Vietnamese operations. While it's unclear if all necessary permits have been secured, companies in Vietnam often begin site preparations while awaiting regulatory approvals.

On-site observations and sources indicate that over 200 Samsung engineers and staff have been actively involved in the project since at least April. Construction vehicles and workers were visible at the site this week, with a security guard confirming its role as a Samsung semiconductor facility. This expansion further solidifies Samsung's position as the largest foreign investor in Vietnam, with cumulative investments exceeding $23 billion over several decades.

Vietnam: A Growing Semiconductor Back-End Hub

The new plant is strategically located adjacent to Samsung Electronics' existing large-scale smartphone and tablet manufacturing complex. Vietnam has cemented its role in the global semiconductor supply chain, particularly in the labor-intensive and less capital-intensive areas of assembly, packaging, and testing. The country already hosts facilities for major players such as Intel, Amkor Technology, and Hana Micron.

Chip testing represents the final stage in semiconductor manufacturing, where assembled and packaged chips are rigorously inspected for defects before they are dispatched to consumers and businesses.