The Indochina Energy Company (IEC) began work on a US$390 million solar cell factory on Saturday in the central province of Quang Nam.
The plant spans nearly 12 hectares of the Chu Lai Economic Zone and will boast equipment produced in Europe and America.
The IEC plans to produce cells capable of yielding 120 megawatts annually.
The firm's officials estimate that the plant will take 12 months to complete.
Once operational, the factory will provide roughly 1,000 jobs to the surrounding community, according to the IEC.
All of the factory's products will be exported, initially.
Eventually, the plant will begin to produce solar panels for a power plant in Quang Nam, according to an IEC release.
"Given that traditional energy resources are dwindling all over the world, developing renewable energy resources like wind power and solar power is unavoidable," said Deputy Prime Minister Hoang Trung Hai during the ground-breaking ceremony.
"Solar cell and wind power projects will help Vietnam meet its target of ensuring that 5 percent of total energy production is renewable by 2015," he said.