Semiconductor Technology In Vietnam: A Growing Industry With Global Ambitions
Vietnamese staff working at Intel Products factory | Source: IPV
Vietnam’s semiconductor industry is receiving great attention from international investors. Recently, Vietnam has attracted many giants in the semiconductor industry such as Samsung, Qualcomm, Infineon, Amkor with many investment projects to build factories, expand production, and assemble with values up to billions of USD. However, Vietnam still faces many challenges in infrastructure and human resources that need to be resolved to promote the sustainable development of the semiconductor sector.
Capitalizing On The Opportunities
In the context of the trend of the semiconductor value chain gradually shifting to Southeast Asian countries, Vietnam is assessed to have all the necessary conditions and factors to develop this sector such as a stable political system, favorable geographical location and abundant human resources.
Recently, the government has promulgated a national strategy for developing Vietnam's semiconductor industry, aiming to achieve a revenue scale of over 25 billion USD/year for the 2024-2030 period. This scale will increase to 50 billion USD in the 2030-2040 period. Also, Vietnam has established NIC and 3 high-tech zones in Ho Chi Minh City, Hoa Lac (Hanoi) and Da Nang, ready to welcome semiconductor investors with high incentive mechanisms.
Being a country located in the center of Southeast Asia, Vietnam is considered the most advantageous country among ASEAN countries as it can connect with large markets in the region such as Singapore, Malaysia, Thailand, and Indonesia. In addition, with its geographical location adjacent to China and close to India - two large markets with high demand for technology products, Vietnam can take advantage to expand exports and attract investment from companies wanting to access these markets.
Regarding human resources, Vietnam has an abundant workforce in engineering and technology fields suitable for the semiconductor industry. According to World Economics's ranking (2022), Vietnam is in the list of 10 countries with the highest number of engineering graduates in the world, with more than 40% of science and engineering graduates being young workers with high technical knowledge joining the science and technology workforce.
Attracting Major International Investments
Major global companies have stimulated significant investments in Vietnam’s semiconductor industry. One of the world’s top chip manufacturers, Nvidia, is looking to expand their presence in Vietnam by establishing an AI research and development and training center in Vietnam alongside the installation of supercomputer systems. Nvidia has invested $250 million in partnerships with Vietnamese companies such as Viettel, FPT, Vingroup, and VNG.
“Establishing a foothold in Vietnam is crucial for fostering innovative startups and developing cutting-edge technology in supercomputing and software. We are excited to be part of Vietnam's journey towards technological advancement,” Jensen Huang - Nvidia CEO highlighted.
Additionally, South Korean chipmaker Hana Micron is investing $1 billion to establish a second factory in Vietnam's Bac Giang province. This expansion aligns with the company's strategy to leverage Vietnam's cost-effective manufacturing environment and skilled labor force to support its global operations.
Challenges And Plans Ahead
Despite the positive outlook and strong interest of foreign enterprises in leveraging the industry, Vietnam needs to solve some challenges to build a robust semiconductor ecosystem.
The current manufacturing process involves complex steps, requiring advanced technological expertise and high-level infrastructure, which Vietnam currently lacks.
Specifically, logistics technology and management are still backward, compared to developed countries. This is attributed to the limited access to advanced technology and difficulties in negotiating the right to use technology due to high costs and complex legal requirements.
Also, the infrastructure index group in Vietnam only ranked 70/132 countries, according to the Global Innovation Index 2023 Report. Therefore, Vietnam needs to attract substantial foreign direct investment to build out its semiconductor fabrication and assembly capabilities as the semiconductor industry is highly capital intensive.
Initiatives to expand educational programs and promote research and development (R&D) activities, specialized talent development, advanced manufacturing capabilities and supporting infrastructure are also critical for building a robust semiconductor ecosystem.