Nokia to invest $276 mn in new Vietnam plant

HELSINKI, FINLAND: Nokia, the world's largest phone maker by volume, will build a new plant in Vietnam to strengthen its hold of the growth markets, the company said on Wednesday.

The cost of the new site near Hanoi, due to open in 2012, is around 200 million euros ($276.3 million), and further investments will follow, said the world's largest cellphone maker by volume.

"I think it's a great signal from European investors. Two hundred million euros is quite a significant investment for Vietnam," Matthias Duhn, Executive Director, European Chamber of Commerce in Vietnam, told Reuters.

"We have some short term issues, especially in manufacturing where we have power cuts. We have the usual education, infrastructure and bureaucracy issues, but that should not distract investors from the medium and long term prospects, which are still good," Duhn said.

Vietnam and Southeast Asia are increasingly emerging as one of the alternative manufacturing hubs to mainland China.

The world's top semiconductor firm Intel completed late last year a $1 billion assembly test facility. According to Intel, it is the largest computer equipment and manufacturing plant in Vietnam.

Hon Hai's Foxconn is slated to build a $200 million mobile phone plant in Vietnam this year, state media have reported.

Nokia production chain

Differing from its smaller rivals Nokia has strongly focused on developing its own manufacturing plants, and assembles almost all Nokia-branded phones itself.

Nokia has ten manufacturing sites in China, India, Korea, Finland, Hungary, Romania, Brazil, Mexico, and a smaller plant in Britain for its luxury Vertu brand.

Emerging markets and the sales of non-smartphones are traditional strongholds for Nokia, which last month said it would shift to use Microsoft software as it has struggled to catch up with Google and Apple.

Problems with its smartphone offering have hit Nokia's profit and shares over last year, and led to replacement of its chief executive in September 2010.