Vietnam Plans First Semiconductor Plant

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Despite cautions from officials in the U.S. industry regarding the steep expenses involved, Vietnam is actively engaging in negotiations with various semiconductor companies about the potential establishment of its inaugural chip fabrication facility. This initiative is part of a broader ambition within the Southeast Asian nation, which is currently developing a comprehensive plan to bolster semiconductor investments. This includes courting businesses that specialize in the production of these chips, known as foundries.

Vietnam, which is already recognized as a significant centre for electronics manufacturing in Southeast Asia, is home to the world’s most extensive semiconductor packaging and testing facility operated by the American tech giant Intel, along with a number of enterprises specializing in chip design software.

Vu Tu Thanh, who leads the Vietnam office of the U.S.-ASEAN Business Council, expressed that there have been meetings with approximately six American chip firms, including those that run fabrication plants.

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These discussions follow the recent enhancement of diplomatic ties between Vietnam and the United States, which saw a notable milestone in September with President Joe Biden’s visit to Hanoi. The White House has acknowledged Vietnam’s potential to become an essential node in the global semiconductor supply chains.

The Vietnamese government, within this week, has expressed its goal to establish the nation’s premier chip fabrication plant by the decade’s end. They have highlighted that chip companies would receive the most substantial incentives Vietnam has to offer.

Hung Nguyen, a senior program manager focusing on supply chains at the University of Vietnam in Hanoi, feels that this strategic move could also pave the way for domestic companies, such as the state-run technology firm Viettel, to construct their own fabrication plants using imported technology.

Nevertheless, Robert Li, the Vice President of U.S. Synopsys, a prominent player in chip design with a presence in Vietnam, has advised the Hanoi government to carefully reconsider before allocating subsidies for the construction of fabrication facilities.

During his address at the “Vietnam Semiconductor Summit” held in Hanoi, he highlighted the hefty price tag associated with building a foundry, which could reach up to $50 billion. He pointed out that this would place Vietnam in direct competition for subsidies with other major players like China, the United States, South Korea, and the European Union, all of which have declared their chip investment plans ranging from $50 to $150 billion.

At the same summit, John Neuffer, the President of the U.S. Semiconductor Industry Association, suggested that the Vietnamese government should prioritize sectors of the chip industry where Vietnam has already established its strength, such as in the areas of assembly, packaging, and testing, rather than spreading its resources too thin.

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