Global semiconductor firms are flocking to Vietnam

Vietnam is becoming a semiconductor market star as more global semiconductor makers move there.

Hanmi Semiconductor, a prominent semiconductor equipment manufacturer from South Korea, opened its Bac Ninh location at the end of May.

Hanmi Semiconductor CEO Kwak Dong-shin told Vietnam Investment Review, “We believe that Vietnam is emerging as a production hub for many semiconductor manufacturers.”

In early June 2023, Germany's biggest semiconductor solutions provider for power and IoT systems, Infineon Technologies AG, expanded its operations in Vietnam and established a chip development team in Ha Noi.

The newspaper quoted C. S. Chua, president and managing director of Infineon Technologies Asia Pacific, as saying that Vietnam was becoming a key market for multinational co-operations to find technical talent.

Technavioa predicted 6.12% annual growth in Vietnam's semiconductor industry from 2022 to 2027. US$1.65 billion was predicted for market growth.

Technavio said that smartphone use was fueling market growth. Smartphone makers will establish new plants in the nation to accommodate demand. Vietnam exported 40 phone brands, including Sony and Samsung.

Smart houses with cameras, sensors, control systems, mobile devices, and automation systems required semiconductors.

According to the research, skilled labor shortages are a key market growth barrier.

Technavio said that some vendors sought to shift their semiconductor manufacturing lines to Vietnam due to the US-China trade spat, increasing the need for trained semiconductor employees. However, the nation lacks qualified specialists.

Liu Xin, director of marketing of Laser Ibe Vietnam, which launched a $15 million plan at the end of March, said Vietnam is a great place to invest due to its prospective market and government backing.

The Bank of Korea said that South Korean semiconductor companies, struggling due to weak ship demand in China, soon found a big market in Vietnam.

"Vietnam is emerging as a new source of demand for South Korean semiconductors, as it rises as an international production base for information technology (IT) devices that could potentially replace China in the future," the research stated.

The article said that major smartphone makers have established production centers in Vietnam. Vietnam made IT products with Korean chips.

According to the research, multinational companies, including Korean ones, were building manufacturing plants in Vietnam due to its abundant low-wage labor and proximity to the Chinese market.

Nguyen Khac Giang from ISEA – Yusof Ishak Institution claimed that Vietnam might improve its position in the global value chain and move from a labor-intensive model to a technology-powered model by developing the semiconductor sector. 

He stated this transition will enable Vietnam to attain a GDP per capita of $18,000 by 2045.

He said the semiconductor industry needed to evaluate the policy framework, enhance high-tech vocational training, and assist domestic firms.

Vietnam's semiconductor sector exported $562.5 million to the US in the 12 months ended in February, up 74.9 percent over the previous year.

After Malaysia and Taiwan, Vietnam exported 10% of semiconductor chips to the US.

Source: VNS