Vietnam's Semiconductor Ambitions

Vietnam is speaking with several semiconductor companies to explore the possibility of setting up its own chip manufacturing plant, or fab, and boosting inward investment, although concerns have been expressed about the costs involved by American industry experts.

Vietnam is already a significant player in electronics manufacturing, being home to Intel's largest semiconductor packaging and testing facility and hosting numerous software and chip design companies.

Recent meetings with several American chip companies were held in Vietnam, although the participant's identities have not been disclosed, as discussions are still in their preliminary stages. It is believed talks included U.S. contract manufacturer GlobalFoundries and Taiwan's PSMC and are aimed at establishing Vietnam's first fabrication center, likely focused on making less advanced chips used in automotive and telecommunications applications.

These meetings followed an important milestone in U.S.-Vietnam relations, with the U.S. President's recent visit and the recognition of Vietnam as a potential player in the semiconductor supply chain.

Industry insiders suggest that these meetings are mostly exploratory, gauging interest and discussing possible incentives and subsidies, including support for power supply and infrastructure development.

To promote the country's ambitions to build its first semiconductor facility by the end of the decade, Hanoi is offering incentives to chip companies to make it more of an attractive destination for investments and offering help to local companies such as state-owned Viettel in setting up fabs with imported equipment.

However, Synopsys, one of the leading chip design firms with a presence in Vietnam, has advised caution in providing subsidies for fab construction, pointing out that building a facility could cost as much as $50 billion and mean competing with established players like China, the U.S., South Korea, and the European Union, all of which have their own extensive chip investment plans.

John Neuffer, President of the U.S. Semiconductor Industry Association, has suggested that Vietnam should focus on areas where it already has strengths, such as assembly, packaging, and testing.