Brian Jeffrey
Vietnam’s Strategic Positioning in the Semiconductor Industry
Vietnam is taking significant steps to carve out a role for itself within the rapidly evolving semiconductor sector, which is fueled by the growing need for artificial intelligence and automation. However, the journey into this competitive arena presents substantial hurdles.
Experts have pinpointed four critical obstacles that Vietnam must address to advance its semiconductor industry:
- Establishing a solid technical infrastructure and policy framework to attract investments and remain competitive.
- Building a skilled workforce essential for the sustainability of the industry.
- Integrating local and international businesses into the semiconductor value chain.
- Identifying key segments and products for Vietnam to focus on in the global semiconductor supply chain.
Dr. Tran Dinh Thien, an associate professor and former director of the Vietnam Institute of Economics, noted the necessity for Vietnam to implement strategic reform alongside innovative policies to hasten progress.
Countries like Indonesia and Malaysia are heavily investing in their semiconductor sectors. Although Vietnam has limited financial resources, it has managed to attract important investors, primarily in the testing and packaging areas rather than core R&D activities.
To incentivize growth, Vietnam has introduced Resolution No. 57-NQ/TW, focusing on technological advancement and the digital economy. The government has set a semiconductor development strategy through 2030, aspiring to make Vietnam a pivotal player in the global supply chain by 2050.
Minister of Planning and Investment Nguyen Chi Dung emphasized Vietnam’s collaboration with leading tech firms such as Qualcomm, Google, Meta, and others to facilitate transitions in the supply chain and enhance R&D efforts within the country.
Currently, there are 174 foreign-direct investment (FDI) projects in Vietnam’s semiconductor domain, amounting to nearly $11.6 billion. Notably, in late 2024, a cooperation agreement was established with NVIDIA for setting up an AI research and development center and data center in Vietnam, signaling a potential leap in technology and further investment opportunities in AI and semiconductors.
To foster ongoing development, Vietnam needs to embrace opportunities from the Fourth Industrial Revolution and broaden its international collaborations. Priorities include strengthening industrialization and progressing towards a digital and green economy.
For example, Foxconn, the largest electronics contract manufacturer globally, has invested $383 million in a printed circuit board factory in Bac Ninh, projected to produce 2.79 million products annually. Additionally, Intel has invested over $1.5 billion in its Ho Chi Minh City operations, further embedding Vietnam into the semiconductor supply chain.
Aside from NVIDIA, significant tech companies from South Korea and Taiwan have established AI chip design offices in Vietnam, and some analysts predict that the country could evolve into a global semiconductor hub due to its swift industrial changes and governmental backing.
Despite these strengths, challenges persist, especially regarding workforce skills and access to technology. Vietnam’s semiconductor development plan aims to train 50,000 engineers in the first phase, expanding to 100,000 later.
Currently, Taiwan holds a dominant position in the global semiconductor market, boasting a hefty share due to its skilled labor force and proprietary technologies. Estimates indicate that Taiwan provides around 90% of certain critical semiconductor components worldwide.
Nguyen Khac Lich from the Ministry of Information and Communications highlighted the importance for Vietnam to achieve technological self-sufficiency in order to lessen dependence on foreign entities, with a focus on establishing a high-tech semiconductor manufacturing facility by 2030. Lich asserted, “A country without a semiconductor factory cannot be considered a semiconductor nation.”
Economist Pham Chi Lan echoed this by stressing that human resources and tech capabilities are vital for success. While the Vietnamese government is prioritizing technological investments, sustained efforts are essential to create a robust semiconductor ecosystem.
“Full technology transfer is unlikely. At best, partial access may be achieved. Without a qualified workforce, seizing opportunities will remain challenging,” she cautioned.
Developing a skilled workforce and improving semiconductor engineering education are pivotal for Vietnam’s success in this field.
“There are no shortcuts to our goals. Reaching our semiconductor aspirations demands substantial investment, strategic foresight, and persistent dedication,” Lan concluded.
Vietnam can draw lessons from Malaysia, which successfully attracted semiconductor investment amid the US-China trade tensions. Penang, in particular, has spent decades nurturing a leading semiconductor hub through strong government policies and infrastructure development.
As the global semiconductor competition heats up, Vietnam must continue to invest decisively in human capital, policy reforms, and infrastructure to ensure its foothold in the industry. With rich rare earth resources, a strategic location, and a burgeoning talent pool, Vietnam holds the potential to become a key contributor to the global semiconductor supply chain.
Professor Nguyen Mai from the Association of Foreign-Invested Enterprises recommended that Vietnam capitalize on its strengths in electronics, digital technology, automation, and AI to integrate fully into the global semiconductor landscape.
