Samsung Electro-Mechanics (009150.KS) is pursuing a trillion-won-scale investment to expand production of key artificial intelligence semiconductor components in Vietnam, which has established itself as a global manufacturing hub. With component demand from big tech companies surging, including recent orders from Nvidia, the company plans to secure global market leadership through production facilities backed by multi-trillion-won cumulative investments in the country.
According to industry sources on January 14, Samsung Electro-Mechanics plans to build a new large-scale flip-chip ball grid array (FC-BGA) factory in Vietnam. The investment is reported to be approximately $1.2 billion (1.8 trillion won). With this additional investment, Samsung Electro-Mechanics will have accumulated approximately 3 trillion won worth of FC-BGA production facilities in Vietnam.
FC-BGA is a high-density package substrate that connects semiconductors to main circuit boards. It dramatically improves performance, integration density, and thermal management efficiency in the semiconductor packaging process. This has drawn attention from big tech companies as a core component for AI semiconductors requiring advanced computing, used in data centers, robots, and autonomous vehicles.
For Samsung Electro-Mechanics, package solutions centered on FC-BGA recorded revenue of 2.3 trillion won last year, accounting for more than 20% of total sales and representing a key future growth driver. The company recently secured a contract from Nvidia to supply FC-BGA for its latest Grok3 Language Processing Unit (LPU) chip and is preparing for mass production in the second quarter of this year. It is also expanding its customer base to include competing big tech firms such as Broadcom, Google, Amazon, and Apple, which are developing their own custom chips (ASICs) to compete with Nvidia.
However, leading players including Japan's Ibiden and Shinko Electric, and Taiwan's Unimicron hold more than 70% of the FC-BGA market share. For Samsung Electro-Mechanics to catch up as a latecomer, expanding supply through new factories is essential. The company invested $850 million (approximately 1.3 trillion won) in 2021 to build an FC-BGA factory in Vietnam, but supply still cannot keep pace with global demand as the AI era unfolds. FC-BGA factories in Vietnam and Busan, Korea have already reached maximum production capacity.
Samsung Electro-Mechanics CEO Chang Duk-hyun expressed his commitment to aggressive FC-BGA business expansion at the regular shareholders' meeting last month. "Production capacity is running at maximum, and customer demand exceeds current capacity by more than 50%," he said. "Samsung Electro-Mechanics' FC-BGA technology is the most advanced in the industry."
With this investment, Samsung Electro-Mechanics will have secured approximately 5 trillion won worth of production facilities in Vietnam since establishing its local subsidiary in 2013, encompassing camera modules, printed circuit boards (PCBs), and FC-BGA. As Vietnam emerges as a global manufacturing hub to replace China, Samsung Electro-Mechanics is strengthening its supply of flagship products centered on this location. Vietnam offers low labor costs and geopolitical advantages as a global logistics hub, and is gaining attention as an alternative to Chinese factories facing business disruptions due to U.S.-China trade tensions.
Samsung Electro-Mechanics' investment is expected to create synergies with the rapidly growing semiconductor-related industries in Vietnam. Samsung Electronics alone has built manufacturing infrastructure and R&D centers worth $23.2 billion (approximately 34.4 trillion won) covering smartphones, displays, and home appliances in Vietnam. Viettel, the largest state-owned telecommunications company in Vietnam, is also building the country's first fab (manufacturing facility) capable of producing semiconductors domestically.
Samsung Electro-Mechanics is also planning to expand local production by building a third multilayer ceramic capacitor (MLCC) factory in the Philippines, near Vietnam. MLCC is another key AI semiconductor component. The company established its local subsidiary in Calamba, Laguna, Philippines in 1997 and has been producing MLCC since 2000. Despite expanding factories twice in 2015 and 2021, production capacity remains insufficient as orders from big tech companies continue to pour in.
