Vietnam Semiconductor Supply Chain: Opportunities and Challenges

Understanding Vietnam Semiconductor Supply Chain

The semiconductor supply chain can be categorized into six steps: chip design, chip manufacturing, manufacturing equipment, assembly, testing, and packaging. Vietnam has numerous semiconductor-related factories; however, there is currently no front-end fabrication facility in the country. Vietnam’s participation remains primarily in back-end activities such as assembly, testing, and packaging (ATP).

Current Landscape of Chip Design in Vietnam

As of 2024, there are around 50 chip design companies in Vietnam. Among them, Intel, Renesas, Marvell, Synopsys, and Realtek are primarily foreign-invested enterprises (FDI). Domestic companies such as ICD REC, Viettel, and BKAV have also entered the field. However, their designs are still based on older process nodes (180 nm – 350 nm) and must be fabricated overseas, primarily in Taiwan.

Government Initiatives and Future Goals

In recent years, the Vietnamese government has actively sought global investment in the semiconductor sector. The country recognizes that development must be gradual, starting from the simpler stages of the supply chain. Recently, the government set a target of establishing one small-scale semiconductor fabrication facility for analog/IoT chips above 180 nm. Additionally, the aim is to reach 100 chip designers in Vietnam by 2030, under a decision signed by the Prime Minister in 2024.

This plan clearly shows Vietnam’s intention to move deeper into the semiconductor supply chain. However, this does not mean the country will overlook the importance of continued investment in ATP operations. Alongside future fabrication and design development, Vietnam remains committed to scaling up the ATP segment, combining foreign direct investment with efforts to strengthen domestic capabilities.

Rare Earth Resources: A Strategic Advantage

On the other hand, Vietnam ranks among the world’s top ten countries with the largest rare earth reserves, standing second globally in terms of potential volume. Although the country has not yet been able to effectively exploit or process these resources at a deeper level, the export of rare earth ores is strictly restricted to prevent the outflow of raw materials. This policy is designed to promote domestic processing and value addition, laying the groundwork for the development of high-tech industries in the future.

Given the growing global demand for rare earths in semiconductor and renewable energy production, Vietnam’s untapped reserves represent a significant strategic advantage. This is also why many companies are considering Vietnam as an ideal location for semiconductor investment. With effective foreign cooperation in technology transfer and investment, these resources could become a crucial enabler of Vietnam’s semiconductor ambitions.

Challenges Facing Vietnam Semiconductor Sector

Despite the promising outlook, several challenges remain. The lack of advanced fabrication facilities is a significant barrier. Without these, Vietnam cannot produce cutting-edge chips. Furthermore, the existing domestic companies often lack the necessary technology and expertise to compete on a global scale.

Investment in Infrastructure

To overcome these challenges, Vietnam must invest in infrastructure. This includes not only fabrication facilities but also research and development centers. Such investments will help build a robust ecosystem for semiconductor manufacturing.

Education and Workforce Development

Another critical area is education. The semiconductor industry requires a skilled workforce. Therefore, Vietnam needs to enhance its educational programs to produce graduates equipped with the necessary skills. Collaborations with foreign universities and institutions can facilitate this process.

Regulatory Environment

The regulatory environment also plays a crucial role. Streamlining regulations can attract more foreign investment. A clear and supportive policy framework will encourage companies to establish operations in Vietnam.

Conclusion: A Bright Future Ahead

In conclusion, Vietnam's semiconductor sector is at a pivotal point. The government's proactive approach, combined with the country's rich natural resources, positions it well for future growth. By addressing existing challenges and fostering a conducive environment for investment, Vietnam can become a significant player in the global semiconductor market.

For foreign companies looking to enter or expand in Vietnam, understanding these dynamics is essential. The potential for growth is immense, and with the right strategies, success can be achieved in this burgeoning market.