LG Display announced that the company has inked a deal to construct a display module assembly factory in Hai Phong, Vietnam, reported Reuters. LG Display has signed a memorandum of understanding with the city authority of Hai Phong to invest in building the new module facility.

The company will invest US $1.5 billion in the factory and expects the new module assembly plant will contribute to increasing production of OLED display panels back in Korea, reported the Korea Times.

LG Display, supplier of smartphone screens to clients including Apple and LG Electronics, said that the lower human resource costs are the key factor that encouraged the Korean giant to construct the new facility. This is clearly a reasonable move, echoing other electronics firms operating in Vietnam, including Samsung, Microsoft, Intel, Canon, Panasonic and Toshiba, according to Reuters.

The company is currently running module assembly lines domestically in its factories in Paju, Gyeonggi Province, and Gumi, North Gyeongsang Province. Meanwhile, it has several Chinese-based module production lines in Guangzhou, Nanjing and Yantai, reported the Korea Times.

The company is to establish a local subsidiary within the first half of 2016 and start mass production of modules in mid-2017.