Making semiconductor industry a key economic sector

In addition to its strong strategic relationships with most major semiconductor powerhouses, Vietnam is emerging as a key destination for foreign direct investment in this sector.

The recently issued Vietnam Semiconductor Industry Development Strategy to 2030, with a vision to 2050, has laid the foundation, direction, and vision for this industry's rapid and sustainable growth.

According to the roadmap outlined in the Strategy, Vietnam aims to become one of the global centres for the semiconductor and electronics industry by 2040 and to be among the world's leading countries in this field by 2050.

MULTIPLE ADVANTAGES

In recent years, the global semiconductor industry has experienced remarkable growth, with total 2024 revenue estimated at 600 billion USD and projected to reach 1 trillion USD by 2030.

In particular, China dominates silicon production from raw materials, controlling over 60% of the global supply. It also plays a major role in assembly, testing, and packaging (ATP) due to its low labour costs and large-scale manufacturing capacity. The United States leads in logic chips and electronic design automation (EDA) software, holding over 50% of the global market share in each sector.

The Republic of Korea (RoK) is the top producer of memory chips, controlling over 60% of global memory chip output. Meanwhile, Taiwan (China) serves as a key hub for wafer fabrication—the foundation for chip manufacturing—primarily through TSMC, the world's leading contract chip manufacturer and a critical player in ATP.

The ATP supply chain is distributed across multiple countries and territories, including China, Taiwan (China), Vietnam, Malaysia, and the Philippines, creating a globally connected network that meets the growing demand for semiconductor production.

This landscape has raised concerns about technological dependencies, making supply chain diversification a strategic priority for many nations.

Leading semiconductor nations such as the US, the EU, and the RoK are all working to establish additional production facilities in multiple countries to reduce reliance on a single supply source and ensure the security of the semiconductor supply chain. This shift presents a significant opportunity for Vietnam to deepen its involvement in the global semiconductor industry and gradually develop its own semiconductor sector.

Additionally, Vietnam holds great potential in rare earth reserves, estimated at around 20 million tonnes. The country is also among the 16 most populous nations globally, with a relatively large domestic market. Vietnam has the advantage of a young population with strong STEM (Science, Technology, Engineering, and Mathematics) capabilities, making it well-positioned to quickly meet the workforce demands for the development of the semiconductor industry.

Additionally, Vietnam holds a crucial geopolitical advantage, with a flight radius of approximately 4-5 hours covering 70% of the world’s semiconductor industry hubs.

Vietnam is well-positioned to develop its semiconductor industry. This readiness stems from strong political commitment at both the central and local levels, as well as a favourable investment and business environment that has attracted major FDI enterprises in the electronics sector.

Vietnam has also upgraded its comprehensive strategic partnerships with most countries that have advanced semiconductor industries. The Joint Statement on upgrading Vietnam-US relations to a Comprehensive Strategic Partnership explicitly highlights two key areas of breakthrough cooperation: innovation and high technology, including the semiconductor industry.

DIFFERENCE IN STRATEGIC THINKING

Vietnam’s first semiconductor factory, Z181, was established in 1979, producing semiconductor electronic components such as diodes and transistors for export.

However, in the early 1990s, due to global political changes, the factory lost its orders, forcing the suspension of chip manufacturing and packaging. To this day, Vietnam’s semiconductor supply chain remains in its early stages, primarily focusing on two main activities: fabless semiconductor chip design and outsourced semiconductor assembly and testing (OSAT).

The chip design industry in Vietnam includes about 40 companies, mostly foreign enterprises such as HCL, Hitachi, NVIDIA, Synopsys, and Marvell, alongside six Vietnamese firms, including FPT and Viettel. In OSAT, Vietnam has successfully attracted major semiconductor packaging corporations such as Intel, Amkor, and Hana Micron, with significant investments. Specifically, Intel has invested 1.5 billion USD in Vietnam, Amkor Technology has invested 1.6 billion USD in a plant in Bac Ninh Province, and Hana Micron, a memory chip OSAT company, has invested 600 million USD.

On September 21, 2024, the Prime Minister signed Vietnam’s Semiconductor Industry Development Strategy to 2030, with a vision to 2050. A key distinguishing factor in this strategy is that Vietnam aims to participate in all stages of the semiconductor supply chain, whereas most other countries focus their strategies on specific areas of strength.

The strategy sets ambitious goals that Vietnam's semiconductor industry revenue is expected to exceed 25 billion USD by 2030; over 50 billion USD by 2040; and more than 100 billion USD by 2050. Furthermore, it outlines 38 specific tasks assigned to ministries, local governments, enterprises, training institutions, and research centres to implement and achieve these targets.