Vietnam aims high on semiconductors

Intel semiconductor assembly and testing plant in HCM City. — VNA/VNS Photo

HÀ NỘI — The launch of the Vietnam Semiconductor Innovation Network was big, but just the starting point of the country's ambition to stay at the forefront of the global chip supply chain.

"Việt Nam will train 50,000 engineers between now and 2030 to embed itself further into the global chip supply chain," said Minister of Planning and Investment Nguyễn Chí Dũng at the launching event.

The minister promised more investment incentives and infrastructure for firms in the sector. While some facilities have been in place in the form of the National Innovation Center (NIC) and three high-tech parks, new ones are on the cards for inauguration.

The launch of a NIC training centre in Hòa Lạc Hi-Tech Park last week speaks volumes about the country's effort to create an enabling environment for chip producers. The US$41-million facility comprises two office blocks and a conference hall, covering 20,000 sqm of campus.  

The Vietnam International Innovation Exhibition 2023 (VIIE 2023) was another event in the mix, where NIC signed deals with heavyweights like Google, Samsung, and Intel on innovation, talent pool, and research in the sector. VIIE 2023 also saw the entry into operation of the Samsung Innovation Campus and a chip design incubation centre initiated by Synopsys and NIC.

All those activities send a clear signal that Việt Nam takes semiconductors seriously and is pressing ahead for the target of building its first chip-making plant by the end of the decade.

According to Trần Đăng Hòa, Director of FPT Conductor JSC, semiconductor chips make their way from concept to consumers through three stages: designing, assembling, and packaging and testing.

He said Việt Nam was well-positioned to play a role in all three stages. The country could gain the interest of foreign investors by offering more incentives related to power supply, land, and manpower.   

"Việt Nam is currently seen as a potential global chip producer, much like Taiwan in the past, which managed to build its world-class semiconductor sector from scratch," said Hòa.

The director also revealed that chips designed by his company were sent to South Korea for assembling and then to Taiwan for packaging & testing, before being exported to customers in the US, Europe, and Japan.  

Bloomberg data shows that Việt Nam's chip exports to the US increased from $312.7 million in February 2022 to $562.5 million in February 2023, accounting for 11.6 per cent of the US chip imports, next to Malaysia (20 per cent) and Taiwan (15.1 per cent). 

Việt Nam's favourable environment for foreign investors has been the reason for tech giants locating their factories in the country.

Ten years ago, Intel opened its over-one-billion-dollar assembly and testing plant in HCM City. Now, Amkor Technology follows suit with another plant in Bắc Ninh Province, which began operation last month. 

Samsung also plans to begin making semiconductor parts in Việt Nam. The production of its flip-chip ball grid array, a surface-mount packaging technology used for integrated circuits, is expected to kickstart later this year.

It is worth noting that Việt Nam is rich in rare earth metals (REM), which play a vital role in chip manufacturing.

In her recent visit to Việt Nam, Chief Economist of the US Department of State Emily Blanchard told Việt Nam News that if Việt Nam chooses to ask for US assistance in developing a REM auction, the US would be happy to provide the very assistance to do so. 

"Technical assistance can extend to and often has support in helping craft tenders or bids to generate the most interest in a wide set of potential partner firms overseas," said the Chief Economist.

She also underlined the role of a skilled and trained workforce in semiconductor manufacturing. As such, workforce development is one of the places where the US seeks to partner with Việt Nam's government to create economic opportunities for Vietnamese citizens to work in the sector.  

Minister Dũng believed that Việt Nam would establish itself as a critical player in the global chip supply chain in the near future. He said Việt Nam "can make it because the country has everything needed to develop its chip-manufacturing industry".

Market research conducted by Custom Market Insights in August shows that the global semiconductor chip market is expected to record a CAGR of 7.1 per cent from 2023 to 2032. In 2022, the market size reached a valuation of $580.1 billion. The figure is anticipated to rise to $634.5 billion in 2023 and $1.1 trillion in 2032.

Meanwhile, the global semiconductor assembly and testing services market is forecast to reach a CAGR of 5.3 per cent during the period. In 2023, the market size is projected to hit $38.1 billion.