Global Semiconductor Supply Chain

Application

To understand how semiconductors are important to us, it is necessary to understand their applications. The vast use of chips in today’s economy ranges from home appliances and smart devices such as phones, PCs, and gaming consoles to vehicles we drive daily, and even to airplanes, fighter jets, and naval vessels. The use of chips can mainly be categorized by their size, specifically in nanometers:

The Supply Chain

In the semiconductor supply chain, a chip is produced through three key stages: Design, Fabrication (Foundry), and Manufacturing Equipment. In addition, there are supporting stages such as materials, and assembly, testing, and packaging (ATP). Among these, design, fabrication, and equipment manufacturing are considered the three core pillars of semiconductor production. Although there are numerous manufacturers and designers worldwide, only a few companies play irreplaceable roles in the global value chain.

Specifically, TSMC (Taiwan) is currently the world’s leading semiconductor manufacturer, accounting for 61.7% of the global market, while Samsung (South Korea) holds 11%, according to Statista 2024. Companies such as Apple, AMD, and NVIDIA are entirely dependent on these foundries because they can design chips but do not have their own cutting-edge fabrication facilities. Chip production requires extremely advanced manufacturing technology that only TSMC and Samsung have truly mastered, far surpassing all other countries.

The Role of Intel

Alongside these firms, Intel (USA) is a unique and critical player. Unlike the Fabless model (design only) of Apple or the Pure-Play Foundry model (fabrication only) of TSMC, Intel historically operated as an IDM (Integrated Device Manufacturer), designing and manufacturing its own chips. Currently, Intel is aggressively investing billions of dollars to regain leadership in advanced chip manufacturing technology, particularly with its 2nm process. It is also reviving its Foundry business to manufacture chips for external Fabless companies, aiming to diversify the supply chain for U.S. partners and aligning with geopolitical efforts to localize advanced manufacturing.

The Equipment Bottleneck

However, even the giants, TSMC, Samsung, and Intel, do not produce the complex equipment used to manufacture chips. Instead, this equipment is supplied by ASML (Netherlands), the only company in the world capable of producing EUV (Extreme Ultraviolet) lithography systems used to manufacture advanced chips down to the 5nm node. Two other companies, Nikon and Canon (Japan), can produce DUV (Deep Ultraviolet) lithography systems for 7nm chips, but ASML still dominates even in this segment.

Although ASML appears to possess self-sufficient production capabilities, it remains partly dependent on the United States. Cymer (U.S.), which was later acquired by ASML, was once the world’s only supplier of lasers for EUV systems. Later, ASML collaborated with TRUMPF (Germany) in 2015 to develop high-power laser systems for EUV lithography, a move seen as part of the Netherlands’ effort to reduce dependence on U.S. suppliers. For DUV lithography systems, laser sources are supplied not only by Cymer and TRUMPF but also by Gigaphoton (Japan). These companies are among the world’s leading manufacturers of excimer lasers used in semiconductor production equipment.

Geopolitical Trends

Given current industrial and geopolitical trends, the United States is actively working to bring advanced chip manufacturing from Taiwan back to U.S. soil. However, Taiwan has been cautious, often transferring production technology that is one generation behind to the U.S., while retaining its most advanced fabrication lines domestically. The highly concentrated nature of the supply chain, where a few companies and countries control the fabrication, equipment, and core IP, makes rapid diversification extremely challenging.

With these moves by both the U.S. and Taiwan, the question arises: where does the opportunity lie for Vietnam, as the U.S. strives to secure control over the semiconductor supply chain?