The factory sits in an industrial park in Thai Nguyen province, a two-hour drive north of Hanoi, where Samsung has been making electronics for more than a decade. The plant, run by Samsung Electro-Mechanics, has spent years producing the camera modules, touch components and circuit boards that go into the conglomerate’s smartphones. Now it is being retooled for a different customer: the AI chip.
Samsung Electro-Mechanics said this week it will invest an additional $1.85 billion to expand semiconductor substrate production at the Vietnam site, according to Vietnam Investment Review, as the company races to keep up with demand from AI server and high-performance processor makers. The investment is part of a larger program that also includes about $3.18 billion for its Sejong site in South Korea, for a combined $5.05 billion.
The product at the center of the expansion is the flip-chip ball grid array substrate, or FC-BGA, a layer of material that connects a high-performance chip to its circuit board and carries the electrical signals and power it needs. As AI accelerators, GPUs and CPUs have grown more powerful, the substrates beneath them have become one of the industry’s quiet bottlenecks, and Samsung Electro-Mechanics has positioned itself as one of the few suppliers able to make them at scale.
The Vietnamese plant’s history shows how far the operation has come. It received its first investment certificate in 2013 with registered capital of $1.2 billion and began operating in February 2015, mostly assembling high-density interconnection boards and other components. Samsung Electro-Mechanics announced plans in late 2021 to spend $850 million on FC-BGA lines at the site, a bet that AI demand would justify the shift. The new $1.85 billion commitment extends that bet and aims to complete construction and begin operations by June 2030.
The move also reaches into a newer technology. The company said it is advancing validation of glass substrate packaging, a next-generation approach that replaces the organic materials now used in substrates with glass, which can carry signals faster and handle the heat that comes off the most advanced chips. Glass substrates are widely seen as the successor to the organic substrates that dominate today’s AI packages, and Samsung Electro-Mechanics is among the firms racing to prove the technology works at commercial volume.
Samsung Electro-Mechanics is not the only part of the conglomerate deepening its Vietnam footprint. Samsung Electronics has been building back-end chip facilities in the same Thai Nguyen industrial park, adding test lines for DRAM and NAND memory that will begin operating in the coming years. Together the moves turn northern Vietnam into a more complete node in Samsung’s semiconductor supply chain, from substrates to final memory testing.
The geography matters. Vietnam has spent years courting electronics manufacturers with tax incentives and a young workforce, and Thai Nguyen has become a hub where Samsung makes smartphones and now an increasing share of the components that go into AI systems. For Samsung Electro-Mechanics, the Vietnamese plant offers a way to expand capacity outside Korea while keeping it close to the assembly lines that already operate nearby.
The demand driving the investment is specific. The company has reportedly secured a deal to supply FC-BGA substrates for Nvidia’s next-generation AI platform, including inference-focused chips, with mass production expected to begin in the second quarter. A supply agreement of that kind turns a capacity expansion from a speculative bet into a contracted obligation, and it helps explain why the company is committing billions across two countries at once.
The glass substrate work carries its own significance. If Samsung Electro-Mechanics can validate glass packaging and move it into production, it would gain an early position in a technology that the industry expects to reshape how AI chips are assembled in the second half of the decade. Competitors in Korea, Japan and Taiwan are chasing the same goal, and the race is now measured in validation cycles rather than years.
The two technologies sit on different clocks. FC-BGA demand is here now, driven by the AI accelerators already shipping, and the Vietnamese expansion is meant to serve that demand directly. Glass substrates are the longer bet, a technology that Intel, Samsung and their rivals have been promising for years but have yet to mass-produce. Samsung Electro-Mechanics is trying to run both races at once, using the current substrate shortage to fund the leap to the next material.
For Vietnam, the investment is the latest sign that the country’s manufacturing story is moving up the value chain, from assembly of phones to the substrates and testing that surround the world’s most expensive chips. For Samsung, it is a wager that the AI build-out will outlast the current cycle and that the companies controlling the packaging and substrates around the chip will share in its profits. The factory in Thai Nguyen, once a maker of camera modules, is being rebuilt for that future.
