Nokia Oyj, the world’s biggest maker of mobile phones, said it plans to open a plant in Vietnam to manufacture low-end phones, bringing its number of handset factories to 11.
The Espoo, Finland-based company will initially invest 200 million euros ($275 million) at the site near Hanoi, and expects “further sizeable investments” in the future, it said in a statement. Nokia aims to have the plant open in 2012.
Nokia churns out about a million low-end phones a day at prices as low as 20 euros apiece. The company aims to cement its position as the biggest manufacturer of phones for emerging markets and upgrade users of basic devices to more powerful feature handsets with Web browsers as higher-speed networks come on line.
“The new manufacturing site will play a key role in our effort to connect the next billion to the Web,” Nokia Senior Vice President Juha Putkiranta said in the statement.
The factory would add to plants already built in Vietnam by technology companies including Intel Corp. and Canon Inc., which are among the biggest investors in the Southeast Asian nation of 87 million people.
Last year, Intel opened a $1 billion assembly and testing plant in Ho Chi Minh City which Chief Executive Paul Otellini said helped put Vietnam “on the map for high-tech investment,” while Microsoft Corp. Chairman Bill Gates said during a 2006 visit to Hanoi that Vietnam has the potential to develop as an outsourcing center similar to India.
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“After the Intel plant came into operation, technology companies now recognize that Vietnam can be a viable location,” said Than Trong Phuc, the Ho Chi Minh City-based managing director of investment fund DFJ VinaCapital L.P. “Costs are rising in China and Vietnam has a cost advantage, although Vietnam still lacks a sufficient supply chain.”
Nokia currently manufactures low-end phones in countries including Brazil, China, India, Hungary, Romania and Mexico. It makes smartphones in Finland, China and South Korea. The company faces challenges in Asia from manufacturers using standard components from Taiwan’s MediaTek Inc., as well as from Samsung Electronics Co. and LG Electronics Inc., the world’s second- and third-largest mobile phone makers.
Low-end phones, which have a limited set of features and lack the flexible programming capabilities of smartphones, accounted for about 80 percent of phone shipments by units last year, according to Gartner Inc.
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