[News] Vietnam’s Opportunities and Challenges as the Next Semiconductor Hub amid Geopolitical Tensions

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Vietnam recently announced its national strategy for developing its semiconductor industry. According to a report from the Diplomat, this plan focuses on gradually building local expertise and integrating the country into the assembly, packaging, and testing (APT) stages of the semiconductor value chain, signaling its long-term goal of becoming a leading global semiconductor hub.

According to the report, the success of Vietnam’s plan relies on how the country uses its geo-economic strengths. The report pointed out that there are some significant advantages.

First, Vietnam’s political environment is relatively stable and predictable compared to some of its regional peers, as the report mentioned. The country is not prone to abrupt changes in policy or political instability. According to the report, this stability offers a considerable advantage attracting foreign companies seeking to make long-term investments in Vietnam’s semiconductor and technology sectors.

Second, the report notes that major semiconductor hubs like the U.S. and South Korea are projected to face significant labor shortages by 2030, making Vietnam’s youthful population a key advantage. Planned investments in the talent pool will support Vietnam’s development of its semiconductor industry, encompassing areas such as APT, chip design, prototyping, and fundamental research.

Lastly, according to the report, Vietnam maintains strategically neutral diplomatic relations with key players in the global semiconductor industry, enhancing its appeal as a prominent semiconductor hub. Amid geopolitical risks, Vietnam avoids taking sides with major superpowers, allowing it to engage in business with all parties.

The report highlights that the comprehensive strategic partnerships Vietnam has established provide a foundation for deeper business cooperation, as evidenced by a rising number of deals, including Amkor’s increased investment in its APT plan in Bac Ninh, chip design training from Cadence and Synopsys in Da Nang, and the expansion of Marvell’s design operations.

On the other hand, Vietnam still faces challenges in establishing itself as a significant player in the global semiconductor value chain. First, according to the report, despite its neutral diplomatic strategies, Vietnam is under increasing pressure to choose between competing superpowers, particularly China and the U.S.

Other challenges include the competition with countries that are already in the race and implementing similar strategies. The report indicated that India is a major talent hub, whereas Malaysia and Indonesia are ahead in drawing foreign investment.

Lastly, there are greater demands to comply with sustainability standards in the semiconductor industry, as indicated by the report. As there is growing scrutiny over carbon emissions and water usage, Vietnam is also adapting its existing infrastructure. The country is striving to balance its commitments to U.N. climate change targets while expanding its presence in the global semiconductor industry.

In conclusion, the report highlights that Vietnam has the potential to become a major player in the global semiconductor value chain by leveraging its political stability, demographic advantages, and balanced diplomatic relationships. However, the country must also address challenges such as increasing geopolitical tensions, the need to meet sustainability standards, and the necessity for investments in its workforce and infrastructure.

Read more

• [News] Vietnam Plans to Establish Over 20 Semiconductor Plants
• [News] Vietnamese Semiconductor Industry Rising with Projected Investment From Global Giants

(Photo credit: Samsung)