New Frontier: Elevating Viet Nam Up the Value Chain

Moving up the value chain

Global events, including the trade tensions and the reconfiguration of international supply chains post-pandemic have accelerated Viet Nam’s journey up the value chain. Once associated with labour-intensive industries such as textiles and furniture, Viet Nam now attracts significant high-tech investments across sectors like semiconductors, electric vehicles (EVs), solar panels, and advanced electronics. The country’s youthful and increasingly skilled workforce and extensive participation in free trade agreements (FTAs) make it a magnet for investors seeking competitiveness and stability.  

Manufacturing remains the backbone of Viet Nam’s FDI inflows, accounting for 67% of the total US$38.2 billion registered FDI in 2024. Within that, newly registered manufacturing investments totalled US$13.4 billion across 1,169 projects. Significantly, this capital was not overly concentrated in any single country: China accounted for 17% of new manufacturing FDI, followed by Hong Kong (15%) and South Korea (9%). By industry, electronics (27%) and electrical equipment (14%) reinforced that manufacturing FDI is driven by value-added production and assembly. 

Strategy transformation in the semiconductor sector

At the heart of Viet Nam’s industrial transformation is the semiconductor industry. Recognising its strategic importance, the government has launched an ambitious roadmap stretching to 2050, aiming to build capacity in chip assembly and research and design (R&D). Between 2024 and 2030, the country plans to attract foreign investment while building domestic capabilities, targeting over 50,000 engineers and 100 chip design firms. By 2040, the vision is to achieve greater self-sufficiency with multiple domestic fabrication and testing facilities, eventually becoming a global semiconductor leader.  

John Campbell, Director and Head of Industrial Services at Savills Viet Nam, believes the country must move past basic chip assembly to become a hub, focusing on the R&D and design process. This initiative places the country on a path toward achieving a value-added rate of 25% or more across the entire semiconductor value chain. Notably, leading semiconductor-related companies such as Intel, OnSemi, Hana Micron, and Amkor Technology have committed over US$1.07 billion to establishing a semiconductor packaging facility in Bac Ninh by 2024. Other significant foreign direct investment (FDI) projects include Foxconn Circuit Precision, which is developing a US$383.33 million factory, and Dutch semiconductor firm BE Semiconductor Industries (BESI), which plans to launch a US$4.9 million project at SHTP in 2025. 

Focusing on high-value sectors strengthens Viet Nam’s industrial capacity while enabling knowledge and technology transfer. The director continues to note that such investments are essential to improving Viet Nam’s skilled labour force and furthering its move up the global value chain. 

Industrial real estate responds to demand

The transformation of the manufacturing sector has had a direct impact on the industrial property market. Demand for industrial land and ready-built (RB) factory space remains high, with national IP occupancy averaging 86% in 2024. The Southern Economic Zone (SEZ), with its established manufacturing base and access to global shipping routes, held a 70% share of RB factory and warehouse supply, with an occupancy rate of 89%. Meanwhile, the Northern Economic Zone (NEZ), strategically positioned near China and other North Asian markets, maintained a strong logistics infrastructure and recorded an occupancy rate of 78%.  

Average industrial land prices reached US$167/m² nationwide, with NEZ at US$132/m² and SEZ at US$183/m². Meanwhile, RB rental rates stood at US$4.6/m²/month countrywide, reflecting robust demand and investor confidence. Industrial Park (IP) development is also evolving, with new projects offering more sophisticated masterplans that include logistics, R&D, and commercial areas. Sustainability is an emerging focus, being led by eco-industrial parks such as Deep C in Hai Phong and Prodexi Eco-IP in the Long An Province. 

John Campbell notes that “Viet Nam's industrial market has performed strongly driven by robust manufacturing growth and high occupancy rates with good rental growth. In the South, the demand continues for a well-established manufacturing base and access to global shipping routes, while the North benefits from its strategic position near China's strong logistics infrastructure. With strong fundamentals, the market is expected to stay attractive to investors, supported by resilient demand and favourable growth drivers." 

However, structural challenges remain. While infrastructure development is progressing, limitations in transport connectivity and deepwater port capacity still constrain industrial efficiency. According to the Ministry of Planning and Investment, 16% of foreign-invested enterprises have moved part of their operations to other countries, with 18% considering similar moves due to infrastructure concerns. Additionally, the supply of skilled labour must keep pace with the needs of high-tech industries, particularly in R&D-intensive sectors like semiconductors and AI. 

Adding to the complexity is the evolving global trade environment. The recent announcement of a possible 46% reciprocal tariff from the US has introduced uncertainty. However, John Campbell notes that Viet Nam is actively engaging in negotiations, and the government remains confident of reaching a more favourable outcome, especially following the 10 April announcement of a 90-day postponement. Despite this headwind, Vietnam’s fundamentals remain strong. The government is committed to keeping interest rates low, investing in infrastructure, and using currency movements to remain export competitive. 

John Campbell describes the pivotal moment as follows: “The country has embraced a diversified and forward-looking growth strategy from low-margin manufacturing to high-tech production. With a favourable geographic location and strong fundamentals such as the government’s appealing investment policies, a large and affordable workforce, a substantial land bank, and committing to long-term infrastructure and human capital development, Viet Nam has demonstrated that it is not only open for business but also open to change." 

This strategic diversification ensures Viet Nam will build a broad and balanced industrial ecosystem capable of weathering external shocks and maintaining long-term momentum. With a strong foundation, rising investor confidence, and a government recognising the value of sustainable, high-tech growth, Viet Nam’s industrial real estate market is poised to lead the region into a new era of resilient prosperity.