Vietnam has been a popular tourism destination and now is seeing economic growth in the semiconductor space, with interest from US-based companies. (Getty Images)
Vietnam’s appeal is growing among global semiconductor players. Several companies including Amkor and 3M are expanding operations in the country. In addition, chip giant Nvidia has forged an alliance with IT firm FPT Corporation in the country.
Earlier this year, Amkor increased its investment to $1.6 billion in a facility with production likely to start in 2025. In addition, Hana plans to increase its investment to over $1 billion by 2025. Samsung, Intel, Marvell and Global Foundries have also invested in Vietnam recently.
Growing appeal of Vietnam to the global chip industry
“Vietnam has a good foundation for developing its semiconductor industry. Intel, Amkor, and Hana have invested there for packaging factories for several years now; SK Hynix, Samsung, and Apple also built their product manufacturing and supply chain there. We have seen Vietnam gradually build its place in global electronics and even in the semiconductor industry chain,” said Helen Chiang, lead of Asia Semiconductor research and the general manager of IDC Taiwan.
Last month, Vietnam launched a series of kick-off sessions, focused on workforce development and public policy. Vietnam is one of eight countries selected by the US Department of State Bureau of Economic and Business Affairs for this initiative. Last year, the US announced a Developing Electronics and Leading Technology Advancement (DELTA) network with Vietnam to “promote talent cultivation, policy coordination, and sector efficiencies in the manufacture of electronic components, against the backdrop of regional trends.”
In a major boost, the US also upgraded its diplomatic relationship with Vietnam to a Comprehensive Strategic Partnership and committed $2 million in funding for Vietnam’s chip workforce development initiatives. These initiatives have helped in boosting Vietnam’s appeal in the global semiconductor industry.
A skilled and low-cost workforce coupled with strong government support are the key factors driving the growth of the Vietnamese semiconductor industry. In addition, the country already has a strong base in the Assembly, Testing and Packaging (ATP) process, which promises to help it move up the chip industry value chain and make inroads in chip manufacturing.
“Vietnam's semiconductor industry is gaining attention as it plays a key role in assembly, testing, and packaging. The country’s manufacturing sector rebounded strongly in 2024, driven by favorable global conditions and increased foreign direct investment (FDI). Vietnam benefits from its strategic location, competitive labor costs, and balanced investment policies, making it an attractive option compared to other Southeast Asian countries,” said Ivan Lam, senior analyst at Counterpoint Research.
What further adds to the opportunity is policy support. The Vietnamese Government has come up with Digital Technology Industry (DTI) Law, which offers a range of incentives and procedural changes to boost the digital technology industry. As per media reports, DTI Law provides up to 150% tax rebate on R&D expenses and up to 10 years of free land usage, among other benefits.
“Practical benefits of the law may include clearer regulations, tax incentives, and increased government backing for semiconductor firms. It could also stimulate growth in higher-value segments like chip design and manufacturing, areas where Vietnam currently lags. However, the law’s impact will ultimately depend on its execution, as well as the infrastructure and workforce readiness to support such advancements,” Lam said.
However, even as it advances its position in the chip industry, Vietnam faces several challenges, especially in chip manufacturing.
“Although Vietnam wants to move beyond packaging and assembly, and to aggressively move to chip design/service, and even chip manufacturing, it’s not very successful till now. A well-prepared infrastructure for building chip manufacturing is still a concern, especially in building a stable supply of power and water," IDC's Chiang said.
"Talent is another issue. Although Vietnam has sufficient qualified people, the gap in building skilled talent and R&D capability in the high-tech/semiconductor industry is still big, especially in the sectors of engineering, chip design, manufacturing and testing,” Chiang added.
