Vietnam – A strategic destination for attracting investment in the semiconductor industry.

Vietnam is becoming a hot investment destination for the semiconductor industry, attracting significant capital and interest from international businesses. Amidst strong global semiconductor market growth and restructuring supply chains, Vietnam is emerging as a promising location. However, alongside these opportunities, Vietnam still faces numerous challenges regarding infrastructure, human resources, and core technological capabilities that need to be addressed to promote the sustainable development of this sector.

Increasingly Attractive

The semiconductor industry plays a crucial role in the production of modern electronic devices by providing essential semiconductor components such as microprocessors, memory, and data storage devices. Driven by the growing demand for electronic devices and the rapid development of new technologies, according to the latest Gartner report, global semiconductor revenue in 2024 is projected to reach $626 billion, an 18.1% increase from 2023. Forecasts indicate that the semiconductor market will continue its growth trajectory in 2025, with estimated revenue reaching $705 billion.

The semiconductor industry is increasingly attractive amidst global changes. The Covid-19 pandemic increased demand for semiconductors due to the growing reliance on electronic devices during and after social distancing.

Benefiting from global changes, Vietnam's semiconductor industry faces numerous opportunities. In recent years, Vietnam has attracted major semiconductor companies such as Samsung, Qualcomm, Infineon, and Amkor, with investment projects to build factories and expand production and assembly worth billions of USD.

By the end of 2024, Vietnam's semiconductor industry is projected to surpass US$6.16 billion, making Vietnam one of the important manufacturing hubs for many global semiconductor companies. Semiconductor chip production is positioned as a new driving force for Vietnam's prosperity.

For example, Samsung has invested in the largest product development center in Southeast Asia in Hanoi. Several semiconductor companies from the Netherlands have also begun investing in Vietnam. BE Semiconductor Industries N.V. of the Netherlands has received an investment certificate for the Ho Chi Minh City High-Tech Park. Ho Chi Minh City, with an initial investment of over 115 billion VND (equivalent to 4.9 million USD) for factory leasing and production. This project is expected to become operational in 2025.

According to Mr. Thomas Rooney - Senior Manager of Savills' Industrial Leasing Department, there are many reasons why Vietnam is an attractive destination for semiconductor investors. Geographically, Vietnam has a strategic location in Southeast Asia, easily accessing major markets in the region, and has favorable natural conditions with large reserves of rare earth elements - important raw materials in semiconductor chip production. Politically, Vietnam has a stable political system, creating a favorable environment for foreign investors. At the same time, the Vietnamese government is actively promoting the semiconductor industry with attractive investment incentives and support policies.

Factors Helping Vietnam Become a Key Player

Ms. Linda Tan, Chairwoman of SEMI, noted that Vietnam is undergoing a strong digital transformation and is one of the fastest-growing economies in Southeast Asia. SEMI representatives pointed out four factors that have, are, and will help Vietnam become a key player in the global supply chain.

First, Vietnam has political stability and a strong government commitment to promoting the semiconductor industry, with a clear roadmap and objectives for three phases.

Second, Vietnam has a favorable geographical location, being close to some of the world's largest markets such as China and ASEAN, and situated on key shipping routes, easily connecting to Europe and North America.

Third, with a young and tech-savvy population, Vietnam has a potential workforce for the semiconductor industry at a relatively competitive labor cost compared to other markets.

Fourth, FDI enterprises are playing a significant role in boosting Vietnam's economy. Major names like Samsung, Amkor, Intel, Micron, Marvell, Infineon… all have factories in Vietnam, further strengthening Vietnam's position in the global supply chain.

To promote the development of domestic enterprises in the high-tech sector, the Government issued Decree No. 182/2024/ND-CP on December 31, 2024, on the establishment, management, and use of the High-Tech Investment Support Fund. This fund is established to provide financial support to enterprises investing in the high-tech industry, especially in artificial intelligence (AI) and semiconductors. According to the regulations, enterprises can receive support up to 50% of the cost of human resource training and 30% of the cost of investment in research and development (R&D).

In addition, many leading global technology corporations have chosen Vietnam as an investment destination. NVIDIA has signed an agreement with the Vietnamese government to establish an AI research and development center and an AI data center in Vietnam. The AI ​​ecosystem in Vietnam is expected to become more vibrant in the near future when large-scale data centers and innovative systems are completed.

Human Resource Challenges for the Semiconductor Industry

Experts believe that although Vietnam has advantages, it still faces many challenges, especially in terms of human resources for the semiconductor industry and technology sharing. According to the objectives of the Vietnam Semiconductor Industry Development Strategy to 2030 and Vision 2050, phase one aims to train 50,000 engineers, and phase two could reach 100,000 engineers and skilled personnel.