Vietnam, a country known for its rich cultural heritage and bustling economic growth, is now stepping into the spotlight for another reason – the remarkable potential of its semiconductor industry.
As global demand for advanced technology continues to grow, Vietnam is seen as a promising region to become the new foundry of the world. Yet, Is merely leveraging existing advantages enough to boost the ambitions to enter this billion-dollar race? Let’s explore Vietnam’s “internal strength” and its effort on the journey to become a promising land for the global semiconductor industry.
Vietnam’s Semiconductor Industry is Growing at A Faster Pace than the World’s
Considered the “spine” of the modern global economy, semiconductor chips play a crucial role in operating electronic devices, keeping everything in function, from Healthcare, IoT, and Automotive sectors, to Household appliances. Therefore, as the global economy begins to recover from crises and political conflicts, the semiconductor industry is witnessing its recovery in positive growth figures.
Some global semiconductor industry statistics
As chip demand thrives worldwide, the semiconductor industry is predicted to
- Reach US$613.10bn in revenue in 2024
- Reach approximately a trillion USD in 2030.
- Bloom at an annual growth rate (CAGR 2024-2027) of 6.30%
- Demand for an additional more than 1 million skilled personnel by 2030
(According to Statista’s research about the Global Semiconductor Market)
Vietnam is not excluded from this potential market. In the context of the US-China tech war, especially in the chip sector, and investments are pouring into developing countries, Vietnam seems to be a potential candidate in the semiconductor industry. Based on Statista’s research about the Vietnamese semiconductor industry:
- Projected to reach approximately US$20 billion in revenue in 2024
- Expected to meet annual growth rate (CAGR 2024-2027) of 9.62%, growing at a faster pace compared to worldwide
Predicted to reach US$26.20 billion in market size in 2027
“Internal Strengths” – Vietnam’s Semiconductor Resource Advantages
According to a 2023 report by the Ministry of Information and Communications, Vietnam ranks third in Asia (behind only Taiwan and Malaysia) in semiconductor chip exports to the United States. Vietnam also ranks among the top countries in chip exportation growth to the United States, being among the six nations with positive growth, while the figures decrease in markets such as Malaysia, China, Japan, and the Philippines. So, what advantages does Vietnam have to make a significant “footprint” on the global semiconductor industry map?
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Rare Earth Resources
Not only blessed by nature with plenty of natural resources but also Vietnam ranks second globally in rare earth reserves, a strategic resource for semiconductor production.
Rare earth elements play a crucial strategic role in semiconductor manufacturing, driving the development of cutting-edge industries such as electronics, superconducting materials, photonics, etc. Daily electronic devices that empower the benefit and advancement of our daily lives, such as laptops, smartphones, televisions, and even electric cars, solar panels, and lithium-ion batteries, are all made from rare earth materials.
With 22 million tons of rare earth reserves primarily concentrated in the Central Highlands region (according to data from the US Geological Survey), Vietnam currently holds nearly 18.5% of the world’s rare earth reserves, totaling 120 million tons. While this represents a strategic advantage for semiconductor production, the exploitation and utilization of rare earth resources may face various challenges. Among which is environmental management and climate change during the exploitation process, as well as issues related to technology and investment capital.
However, once the resource utilization is well-managed, the Vietnam semiconductor industry will be more likely to seize the opportunity for development. Utilizing domestic rare earth resources not only helps reduce dependence on imports from other countries but also, opens up chances for cooperation, and development with worldwide partners, creating a favorable environment for the participation of local businesses in the global semiconductor supply chain.
Young Local Labor Resource
Human resource capital is a crucial factor in the development of the semiconductor industry in Vietnam, as well as globally. In addition to rare earth minerals, Vietnam has a large pool of young labor resources, with a labor force participation rate of 69.3%. A young workforce is more accessible to scientific and technical knowledge, and sensitive to the tech trend to drive the development of high-tech industries.
Moreover, the technical competence of Vietnamese semiconductor engineers is highly rated internationally:
- High Skills – Professional Work Attitude – Excellent Practical Experience, meeting the requirements of the most advanced semiconductor manufacturing techniques.
This is the insight shared by Mr. Nguyen Phuc Vinh, with nearly 20 years of experience in the semiconductor sector, in an interview with Tuoi Tre newspaper when asked for comments on Vietnamese chip designers.
- Enthusiastic – Eager to Learn – Diligent.
This is the assessment from Mr. Robert Li, Vice President of Synopsys (USA) in the Taiwan (China) and South Asia region, regarding the team of Vietnamese semiconductor engineers. He also mentioned that Synopsys is willing to continue developing the team to its full potential.
- Infineon is aiming to expand its workforce in Vietnam, employing “multiple hundreds” of specialized engineers.
This was shared by Mr. Chua Chee Seong, President of the Asia-Pacific region of Infineon (a leading semiconductor manufacturer in Europe) with Nikkei Asia.
Recently, Vietnam has also witnessed an increasing number of major semiconductor corporations worldwide pouring investment in Vietnam, including leading U.S. firms such as Intel and Synopsys, South Korean conglomerate Amkor, and Europe’s Infineon. This shows a “golden” opportunity for Vietnamese chip designers to “step onto the international stage”, affirm their talent, continue enhancing their professional expertise, and make a mark on the global semiconductor map
To leverage this resource advantage, investment in training and skill development is necessary, along with support from public policies, as well as assistance from the semiconductor industry.
The government’s focus on investment and development of the semiconductor industry – one of the potential leading sectors.
Amidst US-China tensions in the semiconductor industry, semiconductor “giants” are diversifying their supply chains to minimize the risk of disruptions from this conflict. This trend is predicted to continue strongly.
Maintaining a close relationship with effective diplomatic policies with countries worldwide, Vietnam has recently attracted investment flows from various countries and global semiconductor giants.
Here are some statements of various global semiconductor leaders:
- “We want to partner with big information technology companies in Vietnam, such as FPT, to establish an ecosystem for semiconductor manufacturing.”
– Said Yoshitaka Kitao, CEO of SBI Holdings, a major Japanese enterprise interested in technology innovation.
- “Vietnam is among the top priorities in Renesas’ foreign investment strategy” Spokesperson of Renesas Electronics, a leading Japanese semiconductor manufacturer, investing in R&D facilities, with over 1,500 Vietnamese employees.
- “Vietnam is the most attractive destination for American investors in the semiconductor industry and could play the role of a strategic partner supplying labor.”
– Said John Neffeur, SIA President, whose members account for nearly 99% of all U.S. semiconductor industry sales.
Currently, semiconductor businesses remain optimistic, expecting Vietnam to maintain favorable incentives after enacting a global minimum tax policy to diversify market manufacturing in the supply chain.
National Efforts – The Solutions assist Vietnam in Acquiring the full potential growth
In recent years, Vietnam has emerged as a significant player in the global semiconductor supply chain. The nation’s strategic location, skilled labor force, and favorable business environment have attracted major international players, investing and fostering the growth of semiconductor manufacturing, as well as design within its borders. Place a keen eye on excellence and innovation, Vietnam heads to become a hub for semiconductor production and research.
So, what actions should be taken to boost Vietnam’s Semiconductor Industry Development, making use of its full potential?
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Talent Development and Skill Enhancement in the Semiconductor Section
A highly skilled workforce is the backbone of any successful semiconductor industry. Yet, in reality, the high-skilled semiconductor personnel shortage has always been a primary challenge for not only Vietnam but also the global market. Acknowledging the situation, Vietnam is focusing on talent development by investing in education and training programs that equip individuals with the necessary skills.
Collaborations between industry players and educational institutions are essential to ensure a constant supply of skilled professionals capable of driving the semiconductor industry forward.
Recently, The National Innovation Center (NIC) of Vietnam, in partnership with FPT Corporation, Tresemi Organization, and Cadence Corporation, with the support of the Da Nang University of Science and Technology (DUT) and the VNU Ho Chi Minh University of Information Technology (UIT), has announced the launching of a specialized “VLSI PHYSICAL DESIGN FUNDAMENTALS” IC design course. The course is organized with the expectation to enhance workforce quality, aiming to train 50,000 semiconductor engineers by 2030, and bringing microchip design concepts into practical applications.
For more information about the course:
https://www.facebook.com/trungtamdaotaothietkevimachseh/
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Government Initiatives and Support for Attracting Investments
Recognizing the immense potential of the semiconductor industry, the Vietnamese government has implemented a series of supportive measures. These include tax incentives, infrastructure development, and most importantly, policies aimed at attracting foreign investment.
Vietnam has progressively improved legal frameworks, creating favorable conditions for investment procedures; and preparing robust infrastructure, fostering a conducive environment for semiconductor companies. The government is laying the groundwork for sustainable growth and increased competitiveness of Vietnam’s semiconductor industry on a global scale.
Significantly, these source advantages are laying the groundwork for Vietnam to seize opportunities, and further engage in the semiconductor production chain. However, strategic research, policies for exploiting rare earth resources, as well as applying appropriate investment attraction policies, also need to be considered to ensure sustainability.
Aiming to conquer the ability to master the chip supply chain, instead of just the chip design phase
As experts suggested, designing, packaging, and testing are the main sectors Vietnam should focus on a few years from now, while step-by-step mastering the core technology in the long run. Apart from the primary focus on chip design (constituting around 50-60% of the chip’s product value), the Vietnam semiconductor industry still set an eye on the ultimate future goal of being able to dominate the chip supply chain remaining a sustainable goal for Vietnam in envisioning a billion-dollar industry future. This objective assists Vietnam in asserting its position and leaving a remarkable “footprint” on the global semiconductor map.