Vietnam has to speed its race to semiconductors

This is the view of Mr. Radomir Tomovic, Manager of the International Business Advisory Team at Dezan Shira & Associate Hanoi, during a recent discussion with the Business Forum Magazine.

The lack of a skilled workforce and ensuring energy supply are among the barriers for Vietnam in the semiconductor industry. Besides these issues, what else should Vietnam pay attention to, sir?

In addition to the shortage of skilled engineers or energy needs, one bottleneck that Vietnam needs to be aware of is the high investment cost. The semiconductor industry may require huge costs just to build a manufacturing facility, and this is a problem everywhere, not just in Vietnam. For example, a 28-nanometer chip manufacturing plant may need about 10 billion USD to build.

Therefore, it is crucial to attract capital from global companies in the industry – which have substantial funds. However, getting them to make an investment decision in Vietnam right now is not easy.

Investors also face great pressure to make a profit from that investment, as well as having to meet very high operating costs. They will need a large market and significant demand to sell in line with those expectations.

Moreover, Vietnam still lacks a cohesive ecosystem to support the semiconductor industry. If a foreign company comes here and can find what they need, such as infrastructure, logistics, support from local businesses to supply when operating the factory, then they will be very likely to make a decision. But Vietnam does not yet have all those elements.

I can see the challenge also lies in competition from other countries, such as Singapore, Thailand, South Korea... All of them are investing a lot in this industry. Many countries already have more advanced foundations than Vietnam in this field and are moving very quickly on this issue.

So what needs to be done to make Vietnam more attractive to foreign semiconductor companies?

Firstly, the Vietnamese government needs to act promptly to keep up with the rapid advancements of neighboring countries. Of course, you have initiatives, but more efforts are needed to be competitive enough compared to all other markets, as countries are also accelerating very fast.

Governments of countries such as China, the United States, South Korea, or some European Union countries have launched very large investment strategies into semiconductor production, ranging from 50 to 150 billion USD. These are very specific measures that send signals to investors. Vietnam needs to make even more specific decisions like that to truly attract big foreign players.

The logistics behind the semiconductor production process are also extremely important. For example, this industry consumes a lot of water and energy. Therefore, Vietnam needs to ensure a sustainable and efficient support system for maintaining and operating manufacturing facilities. In addition, local suppliers need to enhance their capacity to become supplementary sources of supply for what semiconductor companies need when maintaining production in Vietnam.

With the current potential, where should Vietnam start, and with what steps, to build and develop the semiconductor industry?

Vietnam has a strategic location with a long coastline, facilitating the transportation of goods from here to the world very conveniently. Low production costs are another advantage of Vietnam, but that's not everything.

Vietnam clearly has a lot of potential to rise in this field, but it will be difficult to say what to do first, what to do later. But in my opinion, investing in the local market is one of the necessary steps, with the long-term goal of creating a support system for foreign investors.

Training of human resources in semiconductor microcircuits at HCM National University

To achieve that, the local market needs to be further developed. Smaller companies, smaller manufacturing facilities handling simpler types of semiconductors will not require as much in terms of technology or capital as top companies do. Therefore, invest in things that are simple, effective; then, invest in research and development, invest in training engineers; and strive for increasingly complex types of production.

Vietnam already has some associations for the semiconductor industry, but as far as I know, all of them are not related to the government. So, the government could support the establishment of a network for semiconductor industry experts so that they can know exactly where the gaps are, what additional training is needed, or how to navigate.

In terms of education, the government could set up programs to invite foreign experts with experience elsewhere in the world. Find ways to attract them to university programs to teach, exchange experiences on specific issues and topics. Additionally, including some subsidiary fields in the semiconductor sector in university programs could also help speed up the process.

Thank you very much, sir!