Vietnam can utilise its abundant reserves of rare earth materials to lure in high-tech foreign investments.

Deputy Prime Minister Tran Hong Ha last week signed Decision No.866/QD-TTg on the master plan for the exploration, extraction, processing, and use of minerals for the next decade and beyond. The plan includes about 2.1 million tonnes of raw rare earth ores to be exploited every year.

By 2030, there will be expansion of mining technologies and markets, deep processing of rare earth minerals that have been licensed at several mines in the northern provinces of Lai Chau, Lao Cai, and Yen Bai, and the launch of a rare earth processing factory in Yen Bai’s Van Yen district.

According to the US Geological Survey in 2022, Vietnam’s rare earth reserves account for 18 per cent of the world’s total rare earth reserves, at about 22 million tonnes, just behind China (44 million tonnes) and followed by Brazil, Russia, Mongolia, and India.

Rare earths are composed of 17 elements, most of which play an irreplaceable role in the production of high-tech equipment, chemical technology, semiconductors, electric vehicle batteries, wind turbines, telephones, and aircraft.

Based on this, Vietnam is calling for investment in semiconductors. Only the United States, the Netherlands, Japan, and South Korea currently possess top semiconductor technologies, and economist Ha Ton Vinh believes that rare earths are needed for semiconductor manufacturing more than ever.

“Although China has strengths in reserves and rare earth mining, this country is losing its advantage because developed countries in the semiconductor industry do not transfer mining technology to this country,” Vinh said.

“China’s rare earth mining technologies are getting old, while Vietnam is emerging with several advantages, and numerous foreign investors are working to exploit rare earths and develop semiconductor manufacturing factories.”

Khuong Quang Dong, an expert in the automotive industry in France, said that Vietnam should accelerate investment in processing rare earths into strategic materials to supply domestic high-tech industries such as electronics, petrochemical, and especially the semiconductor production.

“We have been exporting raw materials for too long, and now the plan sets out the tasks for mineral processing clearly. We should determine the target and follow the plan even faster because this is the time to sell processing materials. The better the industry develops, the more surplus value will be generated,” Dong said.

A month ago, South Korea and Vietnam signed an MoU to set up a supply chain centre for rare earths and other important minerals to ensure a stable supply for South Korean companies, and called on them to invest in Vietnam in manufacturing semiconductors and other high technologies. Reimbursement is estimated at $4 billion by 2030 as a part of official development assistance.

Thanks to these upsides, Vietnam is expected to be a new destination for semiconductor manufacturing and other high technologies. The Vietnam-Korea Techno Park Complex inside the South Hanoi Supporting Industrial Park, for example, will focus on microchip manufacturing projects, based on an agreement between Vietnam’s N&G Group and South Korea’s SEIN I&D Group made in June.

Also in June, Infineon Technologies AG announced the expansion of operations, establishing a team to develop electronic chips working in Hanoi. This strategy aims to meet the growing demand for functional testing and custom circuit design for Infineon’s system-on-chip solutions. Infineon’s goal is to turn the centre in Hanoi into a research and development centre of international standards.

In addition, American semiconductor corporation Synopsys is also expanding its operations in Vietnam by transferring investment and training engineers in the country, while USI Electronics of Taiwan and Renesas Electronics of Japan also have factories in Vietnam.

Meanwhile, the $2.6-billion Samsung Electro-Mechanics facility in the northern province of Thai Nguyen is manufacturing semiconductors expected to be released at the end of this year, after a rigorous testing process. South Korea’s Amkor Technology is also hurrying to build a $1.6-billion semiconductor complex in the northern province of Bac Ninh, which is expected to start manufacturing within the next couple of months.

The scale of the global chip market in 2022 was about $600 billion and is expected to rise to $1.4 trillion by 2029, and Vietnam ranks ninth globally in exporting electronic goods.

Vietnam Investment Review