Vietnam’s Ambitious Bid to Become a Semiconductor Powerhouse

In the intricate web of global trade, few industries are as pivotal and complex as the semiconductor sector. These tiny chips, the brains behind our smartphones, computers, and countless other devices, are at the heart of a geopolitical tug-of-war that could reshape the global economy. As the United States and China lock horns over technological supremacy, the ripple effects threaten to disrupt supply chains worldwide. Amidst this turmoil, Vietnam is charting a bold course to establish itself as a key player in the semiconductor industry, drawing comparisons to Taiwan, another major hub in this field.

The semiconductor supply chain is a marvel of modern engineering and international cooperation, involving design, fabrication, and assembly phases spread across different countries. The United States dominates the design and software phase, accounting for 48% of global semiconductor market revenue in 2022, driven by industry leaders such as Intel, Nvidia, and AMD. South Korea is a powerhouse in memory chips, controlling 60% of the global memory chip market, including 70.5% of DRAM and 52.6% of NAND flash memory production, thanks to giants like Samsung and SK Hynix. Taiwan, led by TSMC, produces over 69% of the world's advanced semiconductors (sub-10nm nodes), cementing its position as the global leader in chip fabrication. Meanwhile, China, despite being the largest downstream consumer of semiconductors and accounting for 32% of global semiconductor sales, remains dependent on foreign expertise and technology, importing chips worth over $300 billion annually.

These interdependencies highlight the critical role each region plays in maintaining the delicate balance of the global semiconductor ecosystem.

The delicate balance of this ecosystem is increasingly threatened by the escalating tensions between the US and China. The US has imposed stringent sanctions on Chinese tech firms like Huawei, crippling their access to essential semiconductor technologies. These measures highlight the strategic vulnerabilities within the global supply chain, where a disruption in one link can have cascading effects worldwide. The US and its allies are particularly interdependent on China for ATP capabilities, making diversification a critical strategy.?

Against this backdrop, Vietnam is positioning itself as a rising star in the semiconductor industry. The country’s strategy is ambitious, structured in three phases with milestones set for 2030, 2040, and 2050. Currently, Vietnam hosts significant facilities like Intel’s assembly and test plant, one of the largest globally. Companies such as Hana Micron and Amkor Technology are also investing heavily, while local firms like FPT and Sovico Group contribute to the sector’s growth.

However, Vietnam faces substantial challenges. The current workforce meets only about 20% of the industry’s demand, with a shortage of skilled trainers and outdated laboratory facilities. Estimates suggest that Vietnam will need between 30,000 to 50,000 semiconductor engineers by 2030 to meet its development goals.

To understand Vietnam’s potential, it’s instructive to compare it with Taiwan. Taiwan’s semiconductor industry benefits from a well-established infrastructure, a highly skilled workforce, and significant government support. The island’s socioeconomic stability and advanced technological capabilities have made it a critical node in the global supply chain. However, Taiwan’s future is uncertain due to growing geopolitical tensions, particularly with China.

Vietnam, on the other hand, is still developing its infrastructure and workforce. Yet, it has a strategic advantage in its lower labor costs and a growing pool of young, tech-savvy professionals. The Vietnamese government is keenly aware of these strengths and is investing heavily to build a robust semiconductor ecosystem. While Vietnam cannot completely substitute China’s ATP capacity, often referred to as the “factory of the world,” it offers a viable alternative to diversify supply chain risks.?

By 2030, Vietnam aims to establish at least one semiconductor manufacturing plant, develop ten packaging and testing facilities, and create 100 design companies. The country also targets annual semiconductor industry revenue exceeding $25 billion and plans to train at least 50,000 engineers and workers with bachelor’s degrees or higher.

Between 2030 and 2040, Vietnam plans to expand its manufacturing capacity with two additional semiconductor plants and develop 15 packaging and testing facilities. The goal is to double the number of design companies to 200 and achieve annual industry revenue exceeding $50 billion. Training efforts will also intensify, aiming to produce more than 100,000 semiconductor engineers and graduates.

By 2050, Vietnam aspires to be a leading country in the semiconductor and electronics industries, with at least three semiconductor manufacturing plants, 20 packaging and testing facilities, and 300 design companies. The Goal is to achieve annual semiconductor industry revenue exceeding $100 billion, positioning Vietnam as a top global player.?

Despite the major role played by China in the global value chain in terms of ATP and growing manufacturing capabilities, Vietnam’s strategic plan is a testament to its ambition and foresight. By focusing on building infrastructure, expanding manufacturing capabilities, fostering innovation through design companies, and developing a skilled workforce, Vietnam is laying the groundwork to become a significant player in the global semiconductor industry. As the world grapples with the implications of US-China tensions and the uncertain future of Taiwan, Vietnam’s rise, could offer a new axis of stability and growth in this critical sector.