UPDATE 2-Samsung to set up Vietnam handset plant

(Adds Samsung statement)

HANOI/SEOUL, March 21 (Reuters) - Samsung Electronics Co Ltd (005930.KS), the world's No. 2 mobile phone maker, said on Friday it would set up a handset plant in Vietnam, which a Vietnamese official said could involve an investment of up to $670 million.

The plant had long been expected as Samsung, which aims to sell more than 200 million mobile phones this year, seeks to boost overseas production targeting medium- and low-end markets in emerging countries.

"Samsung is awaiting a licence as there are still some matters to clear with their initial investment of $50 million," the official from the Planning and Investment Department in Bac Ninh province, 30 km (19 miles) east of Hanoi, told Reuters.

The official, who declined to be identified, said investment in the project could come in phases and may rise to $670 million.

He added Samsung's plant would be located in Bac Ninh's Yen Phong Industrial Park.

Samsung said in a filing with the Korean stock exchange that it planned to invest $50 million in a mobile phone factory in Vietnam by September, but declined to give other details.

South Korean media previously reported that the Samsung plant was expected to make 30 million handsets a year in the initial stage and will be expanded to produce 100 million units a year eventually.

South Korea-based Samsung said in May 2007 it was looking to build a new mobile phone plant in Vietnam or another country. The company already runs handset plants in China, India and Brazil.

"The Vietnam plant is part of Samsung's drive to expand in the medium- and low-cost phone market," said An Sung-ho, an analyst at Hannuri Investment & Securities. "It will help Samsung meet growing demand for such phones."

Samsung, which trails market leader Nokia (NOK1V.HE) but overtook Motorola Inc (MOT.N) in the handset market last year, expects its global market share to reach the high-teens in percent terms if it meets the 2008 sales goal.

Slowing growth and fierce competition in developed markets such as the United States and Europe have pushed Samsung, once heavily focused on premium phones, to shift its focus to lower-end models. (Reporting by Ho Binh Minh in HANOI and Rhee So-eui in SEOUL; editing by Marie-France Han and Kim Coghill)