UMS Integration has signed a MOU to set up a new joint venture in Vietnam in precision engineering to capture growth in the semiconductor market.
The JV parties are the founding shareholders of three Vietnam based precision engineering and metal plating companies - Viet Nguyen Mechanical Precision Company, Central Metal Mechanical Company and Global Metal Plating Company.
Under terms of this agreement, UMS will invest an "indicative" US$3.6 million to hold around 51.6% in this joint venture, with the final amount and valuation to be finalised.
"This deal is both strategic and synergistic for UMS. We can gain from lower costs and better economies of scale in view of the strong growth in the global semiconductor industry,” says Andy Luong, UMS’ CEO, who was from Vietnam.
“We are currently navigating a critical phase of a multi-year growth cycle in the industry - marked by greater scale, and added complexity.
"With more diversified production facilities, we can benefit from early risk mitigation, and strong executive alignment across our group operations as this investment will complement our existing production facilities in Singapore and Malaysia," he explains.
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Vietnam, according to Luong, is seen as the "next major alternative" chip manufacturing hub to China.
He notes that in February, US President Donald Trump said Vietnam would be removed from the export control list, where it had been placed alongside China and Russia since the Cold War years.
"Once implemented, this would allow Vietnam to access cutting-edge technologies employed in making the most advanced chips," adds Luong.
UMS Integration's Singapore quoted shares closed at $2.53, down 3.07%.
