Semiconductor development surge keenly anticipated

Vietnam will look to build on its semiconductor diplomacy with the formulation of a strategy on developing the much-needed products.

Doan Phuong Lan, vice head of the Steering Committee for Economic Diplomacy under the Ministry of Foreign Affairs (MoFA), said that authorised agencies are currently working with those in a number of markets such as Belgium, Taiwan, and the US to develop Vietnam’s own semiconductor industry.

“For example, Belgium is renowned for development of digital technology and nano electronics, which are considered the key to developing new-generation chips. Meanwhile, Taiwan is known for development of integrated circuit manufacturing, design, and packaging,” Lan said.

Vietnam should focus on developing specific products, not all types of products, in the semiconductor industry, Lan added. Authorised agencies are also working with Taiwan on training and with the US on packaging.

Le Chi Dung, general director of the MoFA’s Department of American Affairs, underlined that there needs to be a specific unit in the MoFA in charge of coordinating semiconductor diplomatic activities.

“The MoFA is to closely combine with other ministries and sectors, especially the Ministry of Planning and Investment (MPI), and the Ministry of Information and Communications in formulating the national strategy on semiconductor industrial development towards 2030. This strategy is now at the final stage of collecting comments and proposals,” said Dung.

“Besides that, we will soon enact a scheme on semiconductor human resources development towards 2030. These two initiatives will help boost Vietnam’s semiconductor ecosystem in the future.”

At present, Vietnam is working with the Organisation for Economic Co-operation and Development to develop and promulgate a report on the semiconductor ecosystem in Vietnam.

Last September, Vietnam and the US forged a new semiconductor partnership to support resilient semiconductor supply chains for US industry, consumers, and workers. The partnership is reflected via an agreement signed regarding semiconductor supply chains, workforce, and ecosystem development, which will formalise this bilateral partnership to expand the capacity of the semiconductor ecosystem in Vietnam, in support of US industry.

Under the International Technology Security and Innovation Fund, created by the CHIPS Act of 2022, the US will partner with Vietnam to further develop the latter’s current semiconductor ecosystem, regulatory framework, and workforce and infrastructure needs.

“We will focus on boosting cooperation in science and technology with the US, with a major focus laid on semiconductor cooperation. It’s necessary now for both nations to effectively and practically implement the agreement, in which Vietnam must continue working with the US side about support in HR, including the development of labs and capacity at upstream stages,” Dung said.

Also last year, the US and Vietnam announced the launch of comprehensive workforce development initiatives in Vietnam that jointly develop hands-on teaching labs and training courses for semiconductor assembly, testing, and packaging.

“The US government will provide initial seed funding of $2 million to launch the initiatives, in conjunction with future support from the Vietnamese government and the private sector,” stated a document from the US Embassy to Vietnam on both nations’ relations. “The effort will support the expansion of good jobs for the American middle class for work further up the semiconductor industry value chain.”

According to a statement from the White House, the US recognises Vietnam’s potential to play a critical role in building resilient semiconductor supply chains, particularly to expand capacity in reliable partners where it cannot be re-shored to the US and promote manufacturing and industry development at home under the US CHIPS Act.

The MPI has been formulating a scheme on semiconductor manufacturing, in the context that the nation has put its state-of-the-art National Innovation Centre into operation, including semiconductor research and development.

It is expected that the Vietnamese side will soon have two meetings with US officials, with the first being the dialogue between two foreign ministers at the end of March and the second between a Vietnamese representative with US Vice President Kamala Harris. The meetings are expected to highlight trade, commercial, and investment ties, including semiconductor development in Vietnam.

On January 25, US Under Secretary of State for Economic Growth, Energy, and the Environment Jose W. Fernandez met with Vietnamese Prime Minister Pham Minh Chinh in Hanoi. According to Fernandez, the US and Vietnam are now in a strong position to boost their partnership, and the US stands ready to assist Vietnam in developing a semiconductor ecosystem including HR training and semiconductor trading promotion.

Fernandez revealed that over a dozen US companies operating in the sectors of semiconductor and green technology have stated their interest in Vietnam’s chip and clean energy industries, with investment considered to be about $8 billion.

One of the key reasons is that Vietnam is now in the process of growing its chip production in response to a growing demand thanks to the steady global adoption of AI.

However, Dung also noted that during meetings with the US side on implementing commitments on supporting Vietnam in semiconductor ecosystem development, the US side suggested that Vietnam pay more attention to developing IT infrastructure in a safer and more reliable manner, with intellectual property rights having to be ensured.

MPI figures show that cumulatively as of February 20, total US registered investment capital in Vietnam reached nearly $11.83 billion for almost 1,340 valid projects, making the US the 11th largest foreign investor in Vietnam.

Two-way trade between Vietnam and the US increased from $450 million in 1995 when the two countries established their diplomatic relations, to $110.6 billion last year. In the first two months of this year, it hit about $15 billion.

Vietnam Investment Review