As global tensions heighten in the semiconductor space, Vietnam is stepping into the limelight with a compelling offering: enticing tax incentives and an array of benefits aimed at semiconductor firms willing to contribute to the evolution of the industry within its borders. Amidst the Sino-American tussle for chip dominance, Vietnam is poised to emerge as a pivotal player within Southeast Asia's tech ecosystem.
Hanoi's blueprint for a robust chip industry encompasses governmental grants funnelled from a dedicated science fund, with a strategy to forge symbiotic public-private research initiatives involving major players such as FPT Corporation. This strategic move has captured the attention of heavyweight contenders like Nvidia and Samsung, both of which are actively seeking to magnify their semiconductor footprint in Vietnam—a nation that stands to gain substantially from the U.S. CHIPS and Science Act, and already boasts Intel's most expansive testing and assembly plant globally.
"Despite the burgeoning potential of Vietnam's semiconductor landscape, the reality is one of a modest localization rate, a lack of cohesion in research and development, and a scarcity of high-caliber talent within the sector," articulated Minister of Science and Technology, Huynh Thanh Dat, during an official government website discourse.
Vietnam's predominantly export-driven economy has not been without its missed opportunities, evidenced by significant investment diversions to Malaysia from companies such as Intel and AT&S, an Austrian powerhouse.
However, there's an upside: Vietnam has successfully attracted a rising contingent of semiconductor enterprises. Additionally, more American entities are poised to enter the fray, contingent on Vietnam's ability to satiate their renewable energy aspirations, as indicated by the U.S. Undersecretary of State for Economic Growth, Energy, and the Environment, Jose Fernandez, during discussions with Nikkei Asia.
Dat underscored the imperative for Vietnam to broker technology transfer agreements with nations at the helm of the chip industry. While specific tax breaks remain under wraps, Dat disclosed that Vietnam intends to refine its policies to draw in international expertise, responding to a recent decline in the issuance of foreign work permits.
Supplementing these efforts, Vietnamese educational institutions are debuting semiconductor-focused coursework in collaboration with corporate stalwarts like Samsung, illustrating Vietnam's commitment to nurturing a 50,000-strong force of semiconductor-savvy engineers by 2030. Although the country is on firm ground regarding its scientific and technological educational framework, an advanced skills deficit presents hurdles to its ascendancy along the electronics value chain.
As Fernandez puts it, the global competition is intense for Vietnam's competence in assembly, testing, and packaging— capabilities that could propel the nation to the forefront of the sector's power players. Furthermore, he hinted at Vietnam becoming a prime beneficiary of the U.S. CHIPS Act, a distinction that would solidify global confidence in the country's industrial capacitance.
The strategic maneuvering between Washington and Beijing has catalyzed a shift within the semiconductor industry as companies diversify production locations to mitigate geopolitical risk. Notably, as reported by Nikkei in December, Apple is transferring engineering efforts to Vietnam for the iPad's development—marking a watershed moment.
In a vigorous nod to its commitment to semiconductor excellence, Hanoi has incorporated the industry into two state-sponsored programs, as noted by Dat. The National Fund for Science and Technology Development, offering financial and infrastructural support, and the National Product Program, which targets the creation of 10 export-worthy, competitive products by 2030, are both prime examples of Vietnam's strategic state-led initiatives designed to spark technological innovation and solidify its place within the global electronics supply chain.
