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Vietnam’s Semiconductor Industry: Progress and Outlook Beyond 2025
Vietnam’s semiconductor industry is steered by strategic government policies, increasing foreign direct investment (FDI), and a growing demand for chips across various sectors. With a projected market value of US$31.28 billion by 2027 and a compound annual growth rate (CAGR) of 11.6 percent between 2023 and 2027, Vietnam is steadily positioning itself as a key player in the global semiconductor supply chain. This article examines Vietnam’s semiconductor advancements, investment climate, industry challenges, and long-term growth potential.
Vietnam’s semiconductor industry: Current landscape
The Vietnam-U.S. Comprehensive Strategic Partnership, announced in September 2023, further accelerated the industry’s momentum, prompting global semiconductor giants to expand operations in the country. Leading players such as Intel, OnSemi, Hana Micron, and Amkor have already established their presence, particularly in outsourced semiconductor assembly and test (OSAT) facilities in the northern region, and research and development (R&D) centers in the south.
Prime Minister Pham Minh Chinh’s Decision No. 1018/QD-TTg, issued on September 21, 2024, outlines Vietnam’s semiconductor strategy until 2030, with a vision extending to 2050. This roadmap focuses on talent development, manufacturing capacity, and global integration, ensuring that Vietnam capitalizes on its geopolitical and economic advantages.
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Companies Participating in Chip Design by Region in Vietnam |
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|
Region |
Companies |
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Hanoi |
Samsung Electronics, Viettel, LG, Toshiba, Amkor Technology, FPT Semiconductor, and CoAsia SEMI Vietnam. |
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Da Nang |
Renesas, Hitachi, Synopsys, Savarti, and FPT Semiconductor. |
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Ho Chi Minh City |
VNChip Technology, Microchip, Panasonic, Renesas, Samsung Electronics, Intel, Savarti, Synopsys, FPT Semiconductor, and Uniquify. |
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Source: Vietnam Microchip Community |
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Key growth drivers
Government initiatives and strategic partnerships
Vietnam has structured its semiconductor growth strategy using the “C = SET + 1” formula, where C stands for Chips, S for Specialization, E for Electronics, and T for Talent, with +1 representing Vietnam as a secure destination for semiconductor investment. This phased development plan consists of:
- Phase 1 (2024-2030): Selectively attracting FDI, forming at least 100 design companies, one small-scale manufacturing facility, and 10 packaging and testing plants.
- Phase 2 (2030-2040): Expanding to 200 design firms, two manufacturing plants, and 15 packaging and testing centers, ensuring self-sufficiency in design and production.
- Phase 3 (2040-2050): Establishing 300 design companies, three fabrication plants, and 20 OSAT plants, making Vietnam a global leader in semiconductor R&D and production.
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Vietnam’s Semiconductor Growth Strategy |
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Category |
Phase 1 |
Phase 2 |
Phase 3 |
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Attracting FDI |
|||
|
Design companies |
100 |
200 |
300 |
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Small-scale semiconductor |
1 |
2 |
3 |
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Packaging plants |
10 |
15 |
20 |
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Scale |
|||
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Revenue of the semiconductor industry |
US$25 billion/year |
US$ 50 billion/year |
US$100 billion/year |
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Value-added rate of the semiconductor industry |
10-15% |
15-20% |
20-25% |
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Revenue of the electronics sector |
US$225 billion/year |
US$485 billion/year |
US$1,045 billion/year |
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Value-added rate of the electronics sector |
10-15% |
15-20% |
20-25% |
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Human resources |
|||
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Engineers and graduates |
50,000 |
100,000 |
Sufficient for the |
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Source: Decision No. 1018/QD-TTg |
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Foreign direct investment and key players
Vietnam has attracted significant FDI in its semiconductor ecosystem. Intel’s assembly and test facility in Ho Chi Minh City is one of its largest global operations, while Amkor Technology invested over US$ 1.07 billion in Bac Ninh for a semiconductor packaging facility. Additionally, Foxconn Circuit Precision is developing a US$ 383.33 million factory, and Dutch semiconductor company BE Semiconductor Industries (BESI) is set to launch a new US$ 4.9 million project in Saigon Hi-Tech Park by early 2025.
In December 2024, Nvidia and the Vietnamese government signed an AI cooperation agreement to establish an AI research and development center and an AI data center. Moreover, Nvidia’s acquisition of VinBrain, a health-tech startup under Vingroup, underscores Vietnam’s growing role in AI-integrated semiconductor applications.
Sectoral opportunities: Semiconductor applications in Vietnam
Automotive and EV industry
Vietnam’s electric vehicle (EV) market, led by VinFast, has created a growing demand for semiconductor components. EV sales surged globally 35 percent year-on-year, and by 2035, EVs are expected to constitute 50 percent of all car sales. Companies like Audi, Mercedes-Benz, and BYD are expanding their EV presence in Vietnam, requiring semiconductor-driven solutions for battery management, power electronics, and vehicle automation.
Industrial manufacturing and ICT
Vietnam’s General Statistics Office (GSO) reported a 6.98 percent growth in the country’s manufacturing and processing industries in Q1 2024. The National Innovation Center (NIC), Saigon Hi-Tech Park (SHTP), and Da Nang Software Park No. 2 are spearheading investments in high-tech manufacturing, helping Vietnam emerge as a preferred destination for semiconductor-driven smart factories.
AI and data centers
With Vietnam’s AI ecosystem expanding, local tech firms like FPT are leveraging partnerships with Nvidia to develop a US$ 200 million AI factory. The rising demand for edge computing, machine learning, and AI chips is positioning Vietnam as an emerging hub for AI-driven semiconductor production.
Critical raw materials and cost competitiveness
Vietnam ranked second among countries with the largest rare-earth reserves in the world, estimated at 22 million metric tons. Vietnam is enhancing its supply chain resilience by securing access to critical raw materials such as silicon wafers and rare earth elements. Vietnam also has an abundant labor force of technically skilled personnel of 6 million people that provides a competitive edge over other players.
Human capital and workforce development
Vietnam has a high Global Human Capital Index of 0.69, one of the highest scores on the human capital index in the Asia-Pacific region. With ongoing investments in STEM education, university-industry collaborations, and workforce upskilling, Vietnam aims to train 50,000 semiconductor engineers by 2030. Major firms like FPT and Viettel are actively supporting talent development initiatives to ensure a skilled workforce for high-tech industries.
Challenges facing Vietnam’s semiconductor industry
Vietnam’s semiconductor industry continues to face several obstacles that require careful consideration during business strategy planning. These challenges include:
- Workforce shortage and skill gap: Vietnam’s semiconductor workforce currently consists of 6,000 engineers, with plans to train 30,000 to 50,000 semiconductor engineers in the coming years. However, the Ministry of Information and Communications estimates that Vietnam requires 150,000 IT and digital engineers annually, but the current workforce supply meets only 40 to 50 percent of demand.
- Infrastructure and energy reliability: Stable infrastructure is critical for semiconductor fabrication. Vietnam’s electricity supply instability poses a challenge, as even minor power outages could lead to losses worth hundreds of millions of dollars. Some industrial zones and high-tech parks have developed independent power sources, but long-term solutions are needed to ensure reliability.
- Competition from regional players: Vietnam faces stiff competition from Taiwan, South Korea, and Malaysia, which have well-established semiconductor supply chains. Malaysia, for example, has decades of experience in outsourced semiconductor assembly and test (OSAT) facilities, giving it a competitive edge in attracting high-tech FDI.
The way forward: business and investment outlook
Despite the challenges, the country’s semiconductor sector offers considerable benefits for businesses and investors. including:
- Expanding semiconductor talent pool: Vietnam is modernizing four national shared semiconductor laboratories at 20 higher education institutions and aims to train 1,300 specialized lecturers. Companies like FPT and Viettel are actively developing local talent to bridge the skill gap.
- Enhancing policy incentives for investors: Vietnam offers corporate income tax (CIT) reductions, with rates as low as 10 percent for 15 years for high-tech projects. Other incentives include land rent exemptions and import duty exemptions for semiconductor manufacturing equipment.
- Strengthening global partnerships: The Vietnam Semiconductor Innovation Network connects local firms with international players to foster collaboration and knowledge exchange. Vietnam’s strategic neutrality in geopolitics allows it to attract investment from major semiconductor-producing nations, mitigating risks associated with trade tensions.
Conclusion
Vietnam’s semiconductor industry is rapidly expanding, driven by government-backed initiatives, foreign investments, and rising demand across sectors like EVs, AI, and industrial automation. However, challenges such as workforce shortages, infrastructure constraints, and regional competition must be addressed to sustain long-term growth. With continued policy support, investment in talent development, and expansion of high-tech infrastructure, Vietnam is well-positioned to become a global semiconductor hub by 2050.
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Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Asia, including ASEAN, China, and India. For editorial matters, contact us here and for a complimentary subscription to our products, please click here. For assistance with investments into Vietnam, please contact us at vietnam@dezshira.com or visit us at www.dezshira.com.
Dezan Shira & Associates assists foreign investors throughout Asia from offices across the world, including in Hanoi, Ho Chi Minh City, and Da Nang. We also maintain offices or have alliance partners assisting foreign investors in China, Hong Kong SAR, Dubai (UAE), Indonesia, Singapore, Philippines, Malaysia, Thailand, Bangladesh, Italy, Germany, the United States, and Australia.
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