Since the Covid-19 pandemic, semiconductor value chains have gradually shifted to Southeast Asian countries. Vietnam, riding this wave, has the necessary conditions and factors to develop its semiconductor industry, such as a stable political system, advantageous geographical location, attractive investment policies, abundant technical and technological human resources, and increasingly developed digital infrastructure.
The Vietnamese Government has shown a strong commitment to pursuing the development of the semiconductor industry, attracting more and more giants to Vietnam. Many large electronics and semiconductor companies, including Intel, Samsung, Synopsys, Qualcomm, Infineon, and Amkor, are in Vietnam and plan to expand their investments, underscoring Vietnam's increasingly important role in the global semiconductor supply chain.
The authorities have been promoting investment cooperation in the semiconductor industry, assigning the Ministry of Planning and Investment, the Ministry of Information and Communications, and other relevant agencies to develop action plans and strategies for this industry. Additionally, there is a plan to develop human resources with 50,000 technology engineers by 2030.
Vietnam has created many attractive investment incentives for semiconductor companies and corporations. High-tech semiconductor investment projects receive the highest incentives.
Given this context, the shift in global semiconductor production chains opens up significant opportunities for Vietnam's semiconductor industry. However, to succeed, Vietnam needs to adopt specific approaches and clear directions.
The series of articles by The Hanoi Times aim to explore Vietnam's opportunities, strengths, and challenges in shaping approaches for this promising industry. Through evaluations and insights from domestic and international experts, diplomats, and the business community, we hope to provide readers with deep and multidimensional perspectives on this emerging field. Vietnam holds high hopes for the semiconductor industry to become a significant breakthrough, propelling the country toward greater prosperity and development.

The expansion of the semiconductor supply chain and manufacturing remains a priority in Vietnam's development strategy.

A recent study has shown that every person in Vietnam needs at least 20 chips to power essential electronic devices such as phones, TVs, and refrigerators. With a population of 100 million people and a young demographic structure, Vietnam has become a "golden land" attracting domestic and international chip suppliers.

The prospect of mastering semiconductor technology or developing "made in Vietnam" chips has taken its first steps, as FPT Semiconductor announced on September 28, 2022, the first integrated circuit chip to be used in Internet of Things (IoT) products for the healthcare sector, becoming the first Vietnamese company to supply commercial chips. Following this, the military-run telecommunications operator Viettel also announced the successful research of 5G chips, one of the most complex technologies in chip manufacturing.

Global geopolitical upheaval in 2023, Vietnam's central position in Southeast Asia, and its inclination towards research and scientific development have put the Vietnamese chip industry in a favorable position. Despite the considerable advantages of Vietnamese chips, all electronic devices in Vietnam currently use foreign-made chips. This indicates that there is still ample room for the development of Vietnam's chip industry and its role in the semiconductor supply chain.

On the other hand, the semiconductor industry is receiving considerable attention from the Government. During a recent meeting with US Treasury Secretary Janet Yellen, Prime Minister Pham Minh Chinh agreed with the US proposal on the importance of expanding the semiconductor supply chain and production, which remains a priority in Vietnam's development strategy. Additionally, Vietnam is promoting institutional mechanisms, incentive policies, technical infrastructure, modern management, and workforce training in this field.

As the backbone of the digital economy, the semiconductor industry is projected to generate revenues of over $620 billion in 2024, rising to $1 trillion by 2030, according to Gartner, a leading global technology consulting and research company. This industry is also seen as a core component in the technological competition among global powers in the 21st century.

The world is currently witnessing a race to miniaturize semiconductor chips. Smaller chips use less energy. Therefore, recent major technological advances, such as changing the light source, have enabled scientists to design very small chips. This has come as a big surprise to the world of semiconductor manufacturing.

Furthermore, the semiconductor industry is in another race to find greener and cleaner energy sources to make the production process more environmentally friendly. Finding ways to increase production efficiency while contributing to zero net emissions is therefore crucial and there is no simple answer to this question.

Commenting on trends in semiconductor technology, Prof. Teck-Seng Low, Senior Vice President at the National University of Singapore, said at a recent Vietnam Business Summit, that there will be a need for equipment to manufacture ultra-small chips in the future.  Researchers are also exploring new structures for computer chips and other chips such as AI chips. There are many different research directions based on different purposes.

According to Prof. Teck-Seng Low, the challenges depend entirely on the pursued goals. "To develop this industry, I think it is necessary to attract foreign investors and develop domestic semiconductor companies. It's about combining internal strengths with foreign investment," Prof. Teck-Seng Low said.

Emphasizing the importance of human resources in this industry, Prof. Sadasivan Shankar, a leading semiconductor technology expert at Stanford University, stated that establishing a typical semiconductor manufacturing plant costs around $10 billion. These factories need to update their technology every two years, which means they need to upgrade their equipment at the same frequency, in addition to employing a large number of skilled technical staff.

Hanoi, one of Vietnam's main economic hubs, is poised to lead the nation's efforts in becoming a significant player in the semiconductor supply chain, a crucial step towards realizing its economic ambitions.

Recently, the Government handed over the Hoa Lac High-Tech Park to the Hanoi People's Committee for management. With its comprehensive infrastructure, many experts shared the view that Hoa Lac High-Tech Park has all the conditions to best support investors looking for a location in the economic center of the Red River Delta region, a key economic region in northern Vietnam, within the Hanoi - Hai Phong - Quang Ninh economic triangle, and the Cao Minh - Hanoi - Hai Phong economic corridor.

Yeh Li-Cheng, Chairman and CEO of Inventec Appliances Co., Ltd., recounted the journey of exploring and finding a site for its investment project in Vietnam since October 2022. The semiconductor material production project of this company has a total investment of $125 million in the first phase and is expected to be operational in the fourth quarter of 2024.

The choice of the South Hanoi Supporting Industrial Park (Hansip) was, according to Yeh, a very calculated one.

"The South Hanoi Supporting Industrial Park is located at the southern end of the Red River Delta, an important transport hub from north to south, surrounded by vast plains, pleasant climate, and beautiful scenery. The industrial park's infrastructure and support facilities are gradually being completed and have become a strategic development focus area for the capital," Yeh Li-Cheng explained to The Hanoi Times.

The insights of Taiwanese business representatives are consistent with a highly favorable assessment of Hanoi's advantages in attracting investment in high-tech fields, including the semiconductor industry. Apart from the Hansip, the city currently has 11 operational industrial parks covering a total area of ​​2,930 hectares. Currently, 14 other industrial park projects are in the process of implementation or planned for development in the coming phases.

Tran Dac Trung, Deputy Head of the Management Board of Hoa Lac High-Tech Park, said that they are continuing to study the conditions in terms of technical infrastructure, land funds, investment mechanisms, and other necessary factors to attract research and semiconductor production projects.

Another key advantage is Hanoi's comprehensive investment attraction policy. The city is ready to guide and support investors; provide security, safety, and stability; ensure basic utilities (electricity, water, logistics); promote infrastructure development; and supply quality human resources to support the goal of developing the semiconductor industry.

CEO of VinaCapital Don Lam said that in his various meetings with investors, many organizations, businesses, and corporations have expressed strong interest in developing the semiconductor industry in Hanoi specifically, and Vietnam in general.

“This is the greatest opportunity for Vietnam to gain access to this trillion-dollar market," said Don Lam.

Dr. Sadasivan Shankar asserts that India is a strong contender because of its highly skilled workforce, while Vietnam has significant potential of its own. Proof of this is that some of Intel's advanced chip packaging technologies have already been implemented in Vietnam.

"Vietnam with its abundant energy supply, skilled labor force, high education levels, and strong investment attraction capabilities will be a promising candidate for the semiconductor industry," said Sadasivan Shankar.

Meanwhile, Nguyen Van Toan, Vice Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), said that the most important thing is to create an ecosystem for semiconductor industry development.

This ecosystem includes high-quality human resources, innovative innovation center systems, social infrastructure for workers, and building a generation of Vietnamese enterprises and entrepreneurs to develop well and collaborate with foreign investors in the semiconductor industry.

"At present, the Government has plans to train and develop human resources in semiconductor technology by assigning many universities, such as FPT University, to train 10,000 students, while other technology schools in Hanoi and Ho Chi Minh City also train thousands of students," Toan said.

Economist Vo Tri Thanh, former Deputy Director of the Central Institute for Economic Management (CIEM), said that in the semiconductor manufacturing supply chain, Vietnam is currently involved in only three stages, namely partial design, packaging, and testing. However, in the future, Vietnam can be expected to develop into an important link in the complete semiconductor industry ecosystem, including design, manufacturing, packaging, and testing, as well as manufacturing equipment with diverse and multi-component enterprises capable of mastering some core technologies.

In this regard, Sadasivan Shankar pointed out that chip packaging is currently complex, and this is a great opportunity for Vietnam to seize. Meanwhile, leaders of US semiconductor industry companies have identified "back-end" as a key area for growth prospects in Vietnam. "Back-end" refers to the stage after the basic components of semiconductor chips have been created through the front-end manufacturing process, such as wafer slicing (large silicon sheets containing multiple chips), fabrication, testing, and packaging.

"Many people ask, why don't we build a 'Make in Vietnam' semiconductor chip factory? We can do it, but it requires very large investment capital, from $10 billion to $20 billion per semiconductor chip manufacturing plant," Toan remarked.

However, the Vice Chairman of VAFIE also emphasized that it would be more feasible if Vietnam could attract the right foreign investment capital and ensure effective collaboration among different players.

Backed by abundant resources, advanced technology, and skilled labor, Vietnam has the potential to achieve full autonomy in semiconductor chip design and manufacturing in the future. This strategic advancement will firmly propel Vietnam towards its objective of becoming a key player in the global semiconductor industry value chain by 2045.