[News] Vietnam’s First Wafer Fab Set to Begin Construction

According to recent reports from foreign media, the Vietnamese government has officially approved a wafer fab construction project with a total investment of VND 12.8 trillion (approximately $500 million). This will be Vietnam’s first wafer fab, marking a key breakthrough in the country’s semiconductor strategy.

First Wafer Fab Established: A Key Breakthrough in Vietnam’s Semiconductor Strategy

In March 2025, Vietnam’s first wafer fab project received approval, with plans to complete construction before 2030. The fab is positioned to produce specialized chips for defense, AI, and high-tech applications. The local government will provide direct financial support covering up to 30% of the total investment (capped at VND 10 trillion) along with tax incentives. A special steering committee, led by the Prime Minister, will oversee the project and coordinate resources.

Over the past few years, Vietnam has taken multiple initiatives to enter the semiconductor industry. In 2023, reports indicated that Vietnam engaged in intensive negotiations with chip companies from the U.S., South Korea, and other regions, aiming to establish a foothold in chip manufacturing.

According to Vu Tu Thanh, Director of the Vietnam office of the US-ASEAN Business Council, Vietnam had held discussions with six U.S. chip companies, including factory operators. However, due to ongoing negotiations, company names were not disclosed. Another anonymous Vietnamese official revealed that discussions involved U.S. company GlobalFoundries and Taiwan’s Powerchip Semiconductor Manufacturing Corp. (PSMC) as potential investors.

In September 2024, Vietnamese Prime Minister Pham Minh Chinh signed Decision No. 1018/QD-TTg, announcing Vietnam’s Semiconductor Industry Development Strategy and Vision for 2030-2050. The strategy outlines a three-phase roadmap to establish Vietnam as a global semiconductor hub.

In the first phase from 2024 to 2030, Vietnam will leverage its geographical and human resource advantages to attract foreign investment and build foundational capabilities. The country aims to establish at least 100 chip design companies, one semiconductor manufacturing plant, and 10 packaging and testing facilities.

In the second phase from 2030 to 2040, Vietnam seeks to become one of the global centers for electronics and semiconductors by expanding to at least 200 design companies, two semiconductor chip manufacturing plants, and 15 semiconductor product packaging and testing facilities. The country will gradually develop independent semiconductor product design and production capabilities.

In the third phase from 2040 to 2050, Vietnam aims to become one of the world’s leading semiconductor and electronics nations, mastering semiconductor and electronics R&D.

The country plans to establish at least 300 design companies, three semiconductor chip manufacturing plants, and 20 semiconductor product packaging and testing facilities. The semiconductor industry’s annual revenue is expected to exceed $100 billion, with a value-added ratio of 20-25%. The electronics industry’s annual revenue is projected to reach $1.045 trillion, also with a value-added ratio of 20-25%.

To achieve these goals, the Vietnamese government has introduced top-tier incentives, including tax breaks, land-use benefits, and power supply guarantees. A National Semiconductor Development Steering Committee, led by the Prime Minister, will coordinate efforts.

Vietnam’s semiconductor ambitions face significant hurdles. Industry experts note that building an advanced wafer fab can cost up to $50 billion, far exceeding the budget for Vietnam’s current project. John Neuffer, President of the U.S. Semiconductor Industry Association (SIA), suggested that Vietnam should prioritize strengthening its existing chip packaging and testing capabilities rather than rushing into advanced semiconductor manufacturing. However, Vietnam is eager to leapfrog ahead by attracting foreign investment and technology while supporting local players like Viettel to build a comprehensive semiconductor ecosystem.

Vietnam: Optimistic About Packaging and Testing, AI, and Compound Semiconductor Markets

Although its first wafer fab is yet to be built, Vietnam has already secured a strong position in the midstream and downstream semiconductor sectors. The country currently hosts 174 foreign semiconductor-related projects with a total investment of nearly $11.6 billion, forming a robust packaging and testing hub.

Intel operates its largest global packaging and testing plant in Vietnam, employing over 2,700 people. Amkor Technology from the U.S. has invested $1.6 billion in a plant in Bac Ninh Province, with an annual capacity of 3.6 billion chips, capturing 5% of the global packaging and testing market.

Hana Micron Vina from South Korea has launched a $600 million semiconductor plant in Bac Giang Province. Taiwan’s Powerchip Semiconductor Manufacturing Corp. (PSMC) and other global players are expanding operations in Vietnam.

Vietnam is also actively developing AI and compound semiconductors. In December 2024, NVIDIA signed an AI cooperation agreement with the Vietnamese government, planning to establish an AI R&D center and data center in Vietnam. NVIDIA and Vietnamese tech firm FPT will invest $200 million in a next-generation AI factory.

Foxconn subsidiary Shunsin Technology plans to invest $80 million in an IC factory in Bac Giang, set to launch in 2026. Samsung Electronics has committed an additional $1 billion investment in semiconductor and chip manufacturing.

Local companies like Viettel are entering chip design and manufacturing through equipment imports. Vietnam aims to establish 10 packaging and testing plants and 100 design companies by 2030, creating an end-to-end semiconductor ecosystem from R&D to production.

To bridge its technological gap, Vietnam has launched a Semiconductor Talent Development Program targeting 50,000 skilled professionals by 2030, including 42,000 engineers and 500 PhDs.

The government also offers incentives such as tax breaks and R&D subsidies to attract foreign investment. Companies are allowed to reinvest 20% of taxable income without paying income tax. This “market-for-technology” strategy is driving Vietnam’s transformation from a labor-intensive manufacturing hub to a high-value semiconductor player.

Vietnam’s semiconductor ambitions face obstacles such as weak infrastructure, including unstable power supply, dependence on imported high-end technology, and a lack of upstream industry presence. Additionally, Malaysia, Singapore, and other Southeast Asian nations are competing for semiconductor investments, forcing Vietnam to balance cost advantages with technology upgrades.

However, global supply chain restructuring and the AI chip boom present Vietnam with a unique window of opportunity. By focusing on mature node chips for automotive and telecom applications and strengthening collaborations with global semiconductor giants, Vietnam is on track to complete its first wafer fab by 2030, gradually solidifying its position in the global semiconductor landscape.

(Photo credit: Amkor Technology Vietnam)