As the US$600 billion industry becomes the linchpin of the global economy, underpinning every electronic product from smartphones to computers, Vietnam’s strategic focus is astute. By pivoting to semiconductors, Vietnam can elevate its position in the global value chain, transit from its cheap labour model, and modernise the economy in alignment with its 2045 vision.
This aims to transform the nation into a developed country with a gross domestic product per capita exceeding US$18,000 – marking the 100th anniversary of Vietnam’s independence with significant economic strides.
Vietnam has mostly focused on attracting big players in the semiconductor businesses to invest in the country.
Intel was the first major corporation to operate parts of the chip-making process in Vietnam, with its Ho Chi Minh City-based facility delivering three billion semiconductor products worldwide as of 2021.
Subsequently, other major global players, including Samsung, Qualcomm, Texas Instruments, SK Hynix, Hayward Quartz Technology, Synopsys and NXP Semiconductors, entered the country.
By the late 2010s, domestic players, including Viettel and FPT, started joining Vietnam’s burgeoning semiconductor industry, which is estimated to be worth US$6.16 billion by 2024.
OVER-RELIANCE ON FOREIGN DIRECT INVESTMENT
Nonetheless, Vietnam’s semiconductor industry is heavily reliant on foreign direct investment. The country’s role in the supply chain is primarily limited to assembling, testing, and packaging. Vietnam is yet to produce any semiconductors domestically. Even the first “Make in Vietnam” chips by FPT Semiconductor must be manufactured in South Korea.
The Vietnamese government’s ambition is to foster self-reliance and cultivate domestic champions in the sector, with future plans to produce chips domestically. In August 2022, Prime Minister Pham Minh Chinh directed the military-owned Viettel to “seriously and effectively” implement plans for R&D, designing and manufacturing domestic chips.
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