LG Bets on Vietnam With First Semiconductor Substrate Plant

South Korean tech giant deepens its Vietnam footprint as AI, 5G and semiconductor demand reshape global supply chains

As governments and corporations race to secure semiconductor supply chains amid the AI boom, South Korea’s LG is making a major new bet on Vietnam. The move highlights Southeast Asia’s growing role in the global chip ecosystem and reinforces Vietnam’s emergence as a strategic manufacturing hub beyond traditional electronics assembly.

LG Innotek, the electronics components arm of LG Group, has announced plans to build its first semiconductor substrate manufacturing facility in Vietnam. The project will be located in Hai Phong, a northern industrial center that has become a magnet for high-tech foreign investment.

The company signed a memorandum of understanding with Hai Phong authorities on June 4 in Seoul, paving the way for construction to begin next month. The facility is expected to be completed by May 2027 and will be developed through LG Innotek’s Vietnamese manufacturing subsidiary.

The new factory marks a significant step up in Vietnam’s semiconductor ambitions. While LG Innotek already operates a camera module manufacturing plant in the country, this will be its first facility dedicated to semiconductor substrates—critical components that connect and support advanced chips used in smartphones, AI devices, data centers and telecommunications equipment.

Covering approximately 330,000 square meters, the plant will manufacture advanced packaging substrates including Radio Frequency System-in-Package (RF-SiP), Flip Chip-Chip Scale Package (FC-CSP), and Flip Chip Ball Grid Array (FC-BGA) products. These technologies are increasingly important as chipmakers seek higher performance and greater energy efficiency for AI computing and next-generation wireless networks.

The investment reflects LG Innotek’s broader dual-hub manufacturing strategy. Its facility in Gumi, South Korea, will continue focusing on research, development and premium semiconductor products, while the Hai Phong operation will serve as a large-scale production center for standard substrate manufacturing. This approach mirrors a broader trend among global technology companies that are diversifying production footprints to improve resilience and reduce costs.

Vietnam’s appeal extends beyond labor costs. LG Innotek cited Hai Phong’s developed industrial infrastructure, proximity to semiconductor packaging and testing companies, and efficient logistics network as key factors behind the decision. The city has already attracted billions of dollars in foreign direct investment from major technology manufacturers and is increasingly positioning itself as a critical node in Asia’s semiconductor value chain.

The timing is notable. Demand for RF-SiP substrates is expected to accelerate as 5G adoption expands globally and preparations for future 6G networks gather pace. Meanwhile, FC-CSP and FC-BGA products are benefiting from surging investment in artificial intelligence, particularly the growing market for AI-enabled devices that process data directly on smartphones, PCs and edge computing systems.

According to LG Innotek, its existing semiconductor substrate production lines in South Korea are operating close to full capacity, making additional manufacturing capability essential to meet rising global demand. CEO Moon Hyuk-soo has stated that the company aims to grow its semiconductor packaging solutions business into a division generating more than KRW 3 trillion (approximately US$2.2 billion) in annual revenue by 2030.

For international investors, the announcement offers another signal that Vietnam is moving higher up the technology value chain. The country is no longer competing solely as a low-cost manufacturing destination; it is increasingly attracting investment in advanced semiconductor production, a sector viewed as central to the future of AI, telecommunications and digital infrastructure. The bigger question now is whether Vietnam can leverage investments like LG’s to establish itself not just as a manufacturing base, but as a long-term semiconductor powerhouse in Asia.