The semiconductor industry plays a crucial role in the modern economy, serving as the foundation for developing many high-tech sectors. Semiconductors are not only a key component in electronic devices like smartphones, computers, and automobiles, but they are also essential for the advancement of new technologies such as artificial intelligence, the Internet of Things (IoT), and cloud computing. The strong growth of the semiconductor industry drives technological innovation, improves productivity, and creates millions of jobs globally.
Semiconductors are one of the most valuable industries in the world, generating hundreds of billions of dollars in output annually. This industry not only generates profits for major companies like TSMC, Intel, and Samsung, but it also impacts other sectors such as telecommunications, healthcare, and transportation.
When it comes to the top semiconductor market in Southeast Asia, Taiwan is a key player in the global supply chain and the leading hub for chip production. Meanwhile, Vietnam is gradually emerging as an attractive option for companies seeking to diversify their supply chains.
Although the semiconductor industry is growing rapidly, it also faces many challenges. Issues such as supply shortages, increased competition from other countries, and fluctuations in global trade policies are affecting the production and development capacity of companies in the industry. Taiwan, in particular, is under pressure from international markets and geopolitical issues, which may create opportunities for Vietnam to attract investment from companies looking to shift production away from Taiwan.
Comparing the Semiconductor Industries of Vietnam and Taiwan
Vietnam’s semiconductor market is in a phase of rapid growth. The Vietnamese government is actively investing in infrastructure and offering incentives to attract international investors in the semiconductor sector. Meanwhile, Taiwan continues to lead with a well-established manufacturing system and a complete supply chain.
However, Vietnam, with its young workforce and lower production costs, could become a “second Taiwan” if it adopts the right strategies and receives sufficient government support. So what factors will create opportunities for the growth of Vietnam’s semiconductor industry and help drive stronger economic growth in the future?
The Current Situation in Both Countries
Taiwan
Taiwan has a long history and prominent position in the semiconductor industry, dating back to the 1970s when the government recognized the importance of high technology and began heavily investing in research and development. This led to the emergence of leading semiconductor companies, with TSMC (Taiwan Semiconductor Manufacturing Company) as a symbol of this success. TSMC currently holds about 50% of the global market share in chip manufacturing, supplying products to major names like Apple, Qualcomm, and Nvidia.
In addition to TSMC, Taiwan is home to other key companies like MediaTek, which supplies chips for mobile phones and consumer electronics, and ASE Group, one of the largest providers of chip packaging and testing services globally. The development of these companies not only boosts Taiwan’s economy but also creates millions of jobs, contributing to higher technological skills and expertise within the industry.
Taiwan has built a complete and efficient semiconductor supply chain, significantly contributing to the global market. Its production system is highly organized, with factories, research centers, and component suppliers located near each other, helping save time and costs during production.
Furthermore, Taiwan leads in the development of advanced chip production technology, capable of manufacturing highly sophisticated circuits used in high-tech products like smartphones, computers, and IoT devices. Taiwan’s contribution to the global supply chain helps reduce risks for tech companies and creates opportunities for other countries to develop their semiconductor industries.
Vietnam
Vietnam’s semiconductor industry is attracting substantial foreign investment thanks to favorable policies and improved infrastructure. The Vietnamese government has taken significant steps to attract investment, including tax reductions, offering land incentives, and providing financial support for high-tech enterprises.
One of the largest projects is Samsung Electronics’ chip manufacturing plant in Ho Chi Minh City. This plant not only produces memory chips but also manufactures components and electronic displays for both domestic and international markets. Samsung’s presence has attracted other investors and created thousands of jobs for local workers.
The increasing investment from major tech corporations not only enhances production capacity but also promotes the growth of supporting industries, creating a more comprehensive supply chain.
As Vietnam’s development accelerates, domestic companies like Viettel Hi-Tech Industry Corporation and FPT Semiconductor are prime examples of local enterprises striving to participate in the semiconductor supply chain. These companies focus not only on chip manufacturing but also on research and development, thereby adding more value to the industry.
The Vietnamese government is implementing several significant policies to promote the semiconductor industry and establish a sustainable ecosystem for this sector. One notable step is the establishment of high-tech zones, such as Hoa Lac High-Tech Park and Saigon High-Tech Park, which serve as hubs for both international and domestic semiconductor companies.
Investment from leading global corporations like Intel and Samsung, along with the recent participation of Amkor Technology in a $1.6 billion factory project in Bac Ninh, exemplifies efforts to attract semiconductor businesses worldwide and build a sustainable semiconductor ecosystem.
Infrastructure and Physical Conditions
One of the largest semiconductor manufacturing plants in Vietnam is Samsung Electronics in Ho Chi Minh City. With advanced technology and modern production processes, this plant contributes millions of products annually, serving both domestic and international markets.
Besides Samsung, Vietnam’s semiconductor industry is investing in specialized industrial zones for high-tech industries to attract more investors and expand production capacity. These industrial parks are equipped with modern infrastructure, including transportation systems, energy, and clean water, helping businesses operate more efficiently.
A key highlight is FPT Semiconductor’s upcoming testing facility for semiconductor products. At Vietnam Innovation Day 2024, FPT Semiconductor proudly announced plans to build an advanced testing plant in collaboration with a leading technology partner. This facility will improve the quality and precision of “Vietnam-made, FPT-made” chips, further establishing FPT Semiconductor’s growing presence in the global semiconductor market.
During the event, experts, businesses, and regulatory bodies expressed optimism that this project will mark a breakthrough for Vietnam’s semiconductor sector, unlocking new opportunities for future growth. FPT Semiconductor is focused on positioning Vietnam as a new hub for semiconductors on the world stage, underscoring its commitment to high-tech advancement.
Moreover, government support for workforce training is also a crucial factor. The Vietnamese government has implemented intensive training programs for engineers and workers in the technology sector. These efforts not only enhance Vietnam’s competitiveness in the semiconductor industry but also create more job opportunities, contributing to a sustainable economy.
Labor Force and Human Resource System
Vietnam is becoming an attractive destination for investors in the semiconductor industry, partly due to lower labor costs compared to Taiwan. The lower cost of living in Vietnam creates favorable conditions for building and operating manufacturing plants. Businesses can significantly save on labor costs, increasing profits and competitiveness in the market.
In contrast, Taiwan’s semiconductor industry has developed a highly skilled workforce trained for many years. Leading universities like National Taiwan University and National Chiao Tung University are renowned for their research and development programs in this field, producing a workforce of excellent engineers and technicians.
However, labor costs in Taiwan are higher, which may be a limiting factor for companies looking to expand production or shift some operations out of Taiwan. Nevertheless, Taiwan’s highly experienced workforce remains a major advantage, helping companies maintain high-quality standards and innovation in production processes.
For FPT Semiconductor, the company places significant emphasis on nurturing a highly skilled workforce to achieve its goal of becoming a leading global semiconductor manufacturer. It invests heavily in specialized engineering training programs and collaborates with universities and international partners to exchange knowledge and enhance the capabilities of its personnel.
As a pioneer in Vietnam’s semiconductor industry, FPT has successfully designed and commercialized chips, securing orders for 70 million units from major markets like Japan, Korea, and Taiwan. Its comprehensive training programs, from undergraduate levels to partnerships with Vietnamese expat experts and international institutions, support Vietnam’s goal of developing 50,000–100,000 semiconductor professionals by 2030.
Geographical Location
Vietnam’s geographical location plays a key role in attracting investment from semiconductor companies. Located in the heart of Southeast Asia, Vietnam is an ideal location for manufacturers looking to enter the rapidly growing semiconductor market in the region. This strategic position allows Vietnam’s semiconductor industry to easily access major markets like China, Japan, and South Korea, where demand for semiconductor products is high.
Additionally, the ease of transporting goods makes Vietnam an ideal hub for global semiconductor supply chains. Companies can reduce shipping time and costs, thereby improving operational efficiency.
Vietnam’s geographical location offers significant advantages for various economic sectors. Situated in the heart of Southeast Asia, Vietnam borders several countries, including China, Laos, and Cambodia, which not only facilitates cultural exchange but also enhances trade activities. With a coastline stretching approximately 3,260 km, Vietnam has a considerable advantage in developing its maritime, fisheries, and coastal tourism industries. Major ports such as Hai Phong, Da Nang, and Ho Chi Minh City provide favorable conditions for the import and export of goods, enabling the country to easily connect with international markets.
Additionally, Vietnam’s diverse climate allows for agricultural development with a wide range of crops and livestock. Regions such as the Red River Delta and the Mekong Delta serve as principal food production areas, supplying food for domestic consumption and export. Furthermore, the geographical position attracts foreign investors, especially in the context of expanding free trade agreements that create business opportunities.
Moreover, proximity to economically developed countries like China offers numerous opportunities for cooperation and growth in industrial and service sectors. The development of industrial zones and export processing zones in Vietnam is also supported by its strategic location, which helps attract investment and create numerous jobs for the workforce. All these factors combine to create a diverse and promising economic landscape for Vietnam in the future.
On the other hand, Taiwan, an island in the Pacific Ocean, faces higher transportation costs to deliver products to major markets. As competition intensifies and demand for semiconductor products increases, logistics costs could become a limiting factor for the competitiveness of Taiwanese semiconductor companies in the international market.
Government Support Policies
Both Vietnam and Taiwan have implemented various policies and government support to promote the growth of the semiconductor industry, creating favorable investment environments and encouraging technological innovation. These measures not only attract investment but also lay a solid foundation for the sustainable development of the industry
Support Policies in Vietnam
The Vietnamese government has introduced several measures to attract investment in the semiconductor and high-tech sectors. Notable policies include land and water rental exemptions for businesses investing in this field. Specifically, businesses may be exempt from or receive up to a 50% reduction in land rental costs in concentrated high-tech zones.
In addition, Vietnam’s semiconductor industry is incentivized through tax benefits, such as corporate income tax exemptions or reduced tax rates for new investment projects. These incentives aim to attract both foreign and domestic companies, fostering job creation and advancing technological capabilities. Furthermore, the government is promoting Free Trade Agreements (FTAs) and international cooperation policies to boost export opportunities and deepen integration into the global semiconductor supply chain.
Alongside tax incentives and infrastructure development, Vietnam prioritizes workforce training. Specialized semiconductor education programs are hosted by major universities, such as the Vietnam National University in Hanoi and Ho Chi Minh City University of Technology, in partnership with international experts. For example, FPT Semiconductor collaborates on training initiatives that give students hands-on experience at domestic and international companies. These efforts align with the strategic goal of having 50,000 to 100,000 skilled workers in the semiconductor industry by 2030.
Prime Minister Phạm Minh Chính’s visit to FPT University and FPT Software at the Hòa Lạc Hi-Tech Park had a notable impact on the company. He emphasized that education is a national priority and that developing human resources is a strategic breakthrough for Vietnam’s transformation during Industry 4.0. This recognition validated FPT’s long-standing strategies and enhanced its reputation. His visit also reinforced FPT’s efforts in semiconductor design and production, encouraging government support to create favorable policies that foster high-tech talent development and attract foreign investment, positioning Vietnam as a key player in the global tech landscape.
In particular, during the visit, Prime Minister Chính showed strong support for FPT’s strategy in semiconductors, especially chip design and manufacturing. He acknowledged that FPT’s investments in information technology and digital technologies align with global development trends. His endorsement serves not only as recognition but also as a critical governmental push to help FPT continue growing, aimed at building an independent economy while integrating more deeply into the global community. Additionally, the Prime Minister urged relevant ministries to collaborate with FPT in policy-making for education and foreign investment, ensuring the growth of high-tech human resources to support Vietnam’s long-term development strategy.
With this backing and guidance from the Prime Minister, FPT will have the opportunity to scale up its training and technology development, especially in semiconductors and digital technologies. Chính also underscored the importance of establishing resource connection centers and policies to attract foreign investment, which will significantly benefit FPT. With government support, FPT is well-positioned for rapid growth, expanding its scope of operations both domestically and internationally. This crucial step will not only help FPT attract more global partners but also elevate Vietnam’s position on the global technology map, moving toward the goal of making Vietnam a major tech center in the region and worldwide.
Support Policies in Taiwan
Similarly, the Taiwanese government has invested heavily in the semiconductor industry, recognizing it as a key driver of economic growth. The government has implemented various policies to support the development and maintain the nation’s leadership in the semiconductor sector, including offering preferential loans to companies in the industry and providing grants for research and development of new technologies.
The government has also established high-tech industrial zones that provide modern infrastructure and support services for companies in the semiconductor sector. These zones not only reduce operational costs but also create an ecosystem that supports the development of startups and small businesses.
Both Vietnam and Taiwan recognize the importance of the semiconductor industry and have implemented various support policies to promote the overall development of the sector. If these efforts are coordinated and effective, both countries will continue to see strong growth in the semiconductor industry in the future.
Global Shifts in Supply Chains
Strategies for Diversifying Supply Chains
In the context of globalization and challenges arising from political, economic, and environmental factors, many leading technology companies are shifting their strategies to diversify supply chains. This strategy not only helps companies mitigate the risks associated with relying on a single supply source but also opens up opportunities to explore new markets.
For the semiconductor industry, diversifying supply chains means companies are looking for new manufacturing locations, such as Vietnam, to complement existing facilities in Taiwan and China. This not only reduces supply risks but also enhances the ability to serve closer markets, thereby saving delivery time and shipping costs.
Furthermore, this shift creates opportunities for countries like Vietnam to develop their semiconductor industry, attract investment, and create new jobs. With its low labor costs and favorable geographic location, Vietnam is becoming an attractive option for investors in this field.
Market Growth Potential in the Region
Southeast Asia, particularly Vietnam, is emerging as a hotspot in the semiconductor industry. With increasing demand for electronic devices and high-tech products, countries in the region are actively seeking opportunities to develop this industry. Vietnam, with its investment-friendly policies and infrastructure improvements, is poised to become a key semiconductor manufacturing hub in the future.
The growth of the information technology market, along with increased investment from major corporations such as Samsung, Intel, and Foxconn, is creating a favorable environment for startups and small businesses in the semiconductor sector. Additionally, increased investments in research and development of new technologies will drive innovation and improve product quality.
Conclusion
With the favorable factors currently in place, the future outlook for Vietnam’s semiconductor industry is very promising. Government support and investment-friendly policies, Vietnam is well-positioned to become a significant semiconductor manufacturing center in Southeast Asia and globally.
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