According to a new report from Reuters, Samsung plans to invest as much as $3 billion toward opening its second Vietnam-based smartphone factory in an effort to produce hardware at a lower cost. An unnamed government official confirmed that the project is ongoing, and a Samsung spokesperson shared that the company is in talks with the government over the investment.

South Korea’s Samsung Electronics Co Ltd (005930.KS) has applied for a license to invest $3 billion in building a second smartphone factory in northern Vietnam, a government official said on Monday.

The report adds that Samsung is expected to “build the factory in Thai Nguyen province” following the opening of a $2 billion factory in the same province earlier this year. A government official shared that the existing factory “generated $1.9 billion in export revenue in its first four months of operation” for the province.

The Android handset maker last month reported a 74% drop in mobile profits for its quarter ending in September. The company previously warned investors of the decline citing the lower average selling price of its devices. Samsung pointed to an increase in smartphone sales in that statement but noted that ASP contributed to decreased profits.

Industry observers point to Vietnam’s cheaper workforce and potential tax breaks for making the country appealing for Samsung as it looks to produce hardware at a lower cost.

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