Vietnam possesses a strategic position and immense potential to become a global semiconductor manufacturing hub, as affirmed by NVIDIA CEO Jensen Huang and its abundant natural resources – key raw materials for semiconductor production. However, to realize this potential needs a well-planned and coordinated strategy for developing the Vietnamese semiconductor industry.
The bright outlook for the Vietnamese semiconductor industry
The semiconductor industry is one of the key drivers of technological development in Vietnam. With many advantages, Vietnam is becoming an attractive destination for investors in this field.
The Vietnamese semiconductor industry is showing extremely impressive growth signs. According to the forecast of the Southeast Asia Semiconductor Industry Association (SEMI SEA), the period from 2022 to 2027 will see a growth rate of over 6% for the semiconductor market in Vietnam.
The bright outlook for the Vietnamese semiconductor industry
Abundant and highly trained human resources
In recent years, Vietnam’s education system has made significant strides in training high-quality human resources for the semiconductor industry. Leading universities such as FPT Polytechnic, Hanoi University of Science and Technology, and Ho Chi Minh City University of Technology have partnered with major corporations like FPT Semiconductor to establish microchip training centers or develop specialized programs in microchips, chip design, and semiconductor manufacturing.
The development of many technology fields
In addition, the technological infrastructure in Vietnam is also being heavily invested in and developed. Many industrial parks and export processing zones have been and are being built with modern electricity, telecommunications, and transportation systems. This will be a favorable condition for chip manufacturing factories to help the Vietnamese semiconductor industry develop by leaps and bounds.
Cooperative relations with major powers in the world
In 2023, Vietnam and the United States also jointly signed a Comprehensive Strategic Partnership, built on a solid foundation of history, culture, and common interests. This has an extremely positive impact on promoting cooperation in the semiconductor field, strengthening Vietnam’s image in the eyes of US investors, and expanding markets and innovation.
At FPT Semiconductor, we have also signed an order for 70 million chips over the next 2 years, specifically in 2024 and 2025. These orders come from customers in Taiwan (China), South Korea, and Japan, mainly in medical equipment and other electronic applications. This is also an opportunity for FPT Semiconductor to meet the diverse needs of customers by designing a source chip line with prices competitive with the major players in the global market while ensuring that the products that reach users can be customized to their usage needs.
Cooperative relations with major powers in the world
Realizing Vietnam’s Potential to Produce Semiconductors
The semiconductor industry value chain consists of three main stages: design, manufacturing, and quality testing/packaging. Vietnam currently only participates in the design stage at the beginning and the quality testing and packaging processes at the end. For the manufacturing stage, producing “made in Vietnam” semiconductor chips has not yet been achieved.
In the design field within the Vietnamese semiconductor industry, there is participation from some large domestic enterprises with over 200 personnel, such as FPT Semiconductor and VHT (Viettel). Additionally, the country has also attracted investment with a team of about 5,600 engineers from 36 foreign companies from Japan, the US, Taiwan, China, and South Korea.
In the testing and packaging stage, Vietnam has an Intel factory and several FDI (Foreign Direct Investment) companies involved in assembly, testing, and packaging activities. Specifically, Intel has nearly 3,000 engineers working and has invested $1.5 billion in Vietnam since 2009. In Bac Ninh, the Amkor factory is divided into 3 phases, with over $1.6 billion in investment.
Realizing Vietnam’s Potential to Produce Semiconductors
The demand for recruitment in the design stage depends on the number of enterprises operating in the Vietnamese market. Quality, ability to meet technical requirements, and foreign language proficiency are the essential criteria and factors for effectively and optimally utilizing engineers sent to work abroad.
Vietnam is facing a great opportunity to become a semiconductor powerhouse in Southeast Asia. The government has identified the semiconductor industry as one of its top priorities, with specific policies and plans to attract investment, develop human resources, and build infrastructure.
With the efforts and determination of the Party, the State, and the business community, Vietnam can become a semiconductor production center for the region and the world in the not-too-distant future.
What kind of action plan do we need to bring Vietnam to a semiconductor manufacturing hub?
To become a microchip manufacturing hub, the Vietnamese semiconductor industry needs a comprehensive and synchronized action plan.
Cultivate a critical pool of human resources
At the conference on human resource development for the semiconductor industry on April 24th, the Minister of Planning and Investment emphasized that the “Project on Developing Human Resources for the Semiconductor Industry by 2030, with a vision to 2045” developed at this time is extremely timely and of great significance. It will help mobilize resources, from the state budget to private investment, to invest in training high-quality human resources, providing in-depth training programs on semiconductor technology, microchip design, and manufacturing processes at universities and research institutes.
The project aims to have Vietnamese engineers deeply involved in design, packaging, and testing by 2030, gradually mastering packaging, testing, and grasping manufacturing technology. The goal is to train 50,000 engineers to serve the entire value chain of the semiconductor industry.
Cultivate a critical pool of human resources
Accelerate technology transformation in multiple fields
The Vietnamese semiconductor industry also needs to undergo a revolutionary transformation process in digital transformation, green transformation, and building innovative systems. Applying semiconductor technology to these fields will not only create new demand for chip products but also help improve Vietnam’s competitiveness in high-tech fields.
Create attractive investment opportunities for foreign enterprises
In addition, Vietnam needs to undergo a revolutionary transformation such as digital transformation, green transformation, and the construction of intelligent systems. The application of semiconductor technology in these fields will create new demand for chip products and help improve Vietnam’s competitiveness in high-tech fields.
Moreover, Vietnam demands a reasonable tax mechanism and policies to attract and capitalize on foreign investment opportunities. This mechanism needs to be carefully discussed, balancing the interests of the state and fair competition between enterprises.
According to Decree 94/2020/ND-CP, enterprises will enjoy a corporate income tax rate of only 10% for 30 years from the first year they have revenue. Furthermore, these enterprises are exempted from import duties on raw materials, supplies, and components that are not yet domestically produced to serve production for five years from the start of operations. These preferential policies aim to create an attractive investment environment and attract foreign investors to the semiconductor manufacturing industry in Vietnam.
Conclusion
Despite many challenges, with its immense potential, competitive advantages, and the determination of the government, enterprises, and human resources, along with the investments, the Vietnamese semiconductor industry can fully realize the goal of becoming a global chip manufacturing hub. This is a huge opportunity for Vietnam to affirm its position in the international market, attract investment, create jobs, and drive economic growth.
Follow the journey of Vietnam’s chips reaching out to the world with us at the FPT Semiconductor website!