South Korean semiconductor giant Amkor opened a new $1.6 billion packaging factory in Vietnam on Thursday, as the Southeast Asian nation looks to cash in on the global rush for microchips.

The company hosted a grand opening at the site — which will be used for packaging and testing — in northern industrial Bac Ninh province, next door to Hanoi, a day earlier.

Amkor president and chief executive officer Giel Rutten said the facility would help build the "secure and reliable supply chain our customers need".

Global supply chain shocks and fears about the United States' reliance on China for strategic resources are boosting investment in the growing semiconductor industry in Vietnam.

During his visit to Hanoi last month, US President Joe Biden committed to helping the communist nation develop its capabilities and expand production.

Vietnam's investment minister Nguyen Chi Dung said in late September that "the government is paying special attention to increasing investment in developing the semiconductor sector in Vietnam".

Investors have been encouraged to expand their operations with many preferential policies in place, Dung added.

In September, Hana Micron, also from South Korea, opened a $600 million packaging factory in Bac Giang province.

Ahead of the opening of the Amkor plant, the company said on Facebook that it had "committed $1.6 billion for the first two phases of the project for facility, machinery, and equipment, making a substantial contribution to Vietnam's economic growth".

"The result will be Amkor's most advanced facility, delivering next-generation semiconductor packaging capabilities," the statement said.