The partnership is reflected via the signing of a memorandum of cooperation on 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 Vietnam’s current semiconductor ecosystem, regulatory framework, and workforce and infrastructure needs.

The comprehensive workforce development initiatives in Vietnam will 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. 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 further promote manufacturing and industry development at home under the US CHIPS Act.

Vietnam’s Ministry of Planning and Investment (MPI) has been assigned to formulate a scheme on semiconductor manufacturing, in the context that the nation has put its modern National Innovation Centre into operation, including semiconductor research and development.

The US has set priorities on developing resilient and secure supply chains with Vietnam because the Southeast Asian nation has already demonstrated the capacity to produce semiconductors to world standards with American companies like Intel and Amkor.

“Semiconductors are of vital importance to US manufacturing. The US and Vietnam have become trusted partners based on years of dealing with each other,” said Carl Thayer, emeritus professor at the University of New South Wales. “The US has chosen to prioritise AI and quantum computing because these are the frontier technologies for the future. Vietnam has also set priority on Industry 4.0 technology, so the views of Vietnam and the US are congruent. The US would also like to develop green energy technology with Vietnam.”

According to the joint leaders’ statement on elevating US-Vietnam relations to a comprehensive strategic partnership released last week, Vietnam and the US decided to strengthen science, technology, and digital innovation cooperation, regarding this as a new breakthrough of the Comprehensive Strategic Partnership.

“The US affirmed its commitment to increasing support for Vietnam in the training and development of a high-tech workforce. Acknowledging Vietnam’s tremendous potential as a major player in the semiconductor industry, the two leaders pledged to support the rapid development of Vietnam’s semiconductor ecosystem and to work together energetically to improve Vietnam’s position in the global semiconductor supply chain,” the statement read.

Over the past decade, Vietnam has emerged as a critical node in the global semiconductor supply chain, and investments are only accelerating. Less than an hour’s drive from here in the northern province of Bac Ninh, Amkor – an Arizona-based company – will soon fully open a $1.6 billion factory for semiconductor assembly and testing.

Down in the southern province of Dong Nai, another American company, Onsemi, produces chips that are used in cars around the world. Nearby, in Saigon High-Tech Park, sits the largest Intel assembly and testing facility in the world. Many of the companies investing in Vietnam are also building up their capacity and employment in the US as well.

South Korean component manufacturer LG Innotek recently also confirmed a $1 billion investment to build a manufacturing facility for advanced smartphone camera modules and other optical products in northern Haiphong city. Meanwhile, the new $1.6 billion semiconductor plant of South Korea’s HANMI Semiconductor in Bac Ninh province is scheduled for trial production in late October.

According to German data provider Statista, revenue from Vietnam’s semiconductor market is forecast to hit $20.15 billion this year and post a compound annual growth rate of 11.62 per cent in the 2023-2027 period, for a market volume of $31.28 billion by 2027. The largest market within the semiconductor industry is integrated circuits, with a projected market value of $16.44 billion this year.

Do Van Su, deputy director of the MPI’s Foreign Investment Agency, revealed that at a recent meeting upon their survey in Vietnam, the US Semiconductor Industry Association recognises Vietnam as the future’s semiconductor powerhouse.

“With its unparalleled strength as a manufacturing hub, producing sophisticated smartphones and electronic components, Vietnam stands poised to lead. US investors see more than just potential here. They see a thriving future,” Su said.

Meanwhile, a US Department of Treasury analysis indicated that real manufacturing construction in the US has doubled since the end of 2021. But the US does not seek to build everything in its territory.

“Rather, we believe that long-term economic resilience requires diversified global supply chains. This means deepening our economic integration with the large number of countries we can count on – including Vietnam,” said US Secretary of the Treasury Janet Yellen when she visited Vietnam in July.

Yellen noted that while critical to the production of everyday consumer products like cars and refrigerators, and the development of cutting-edge technologies, virtually all manufacturing of the most sophisticated chips is concentrated in East Asia.

Recent experience demonstrates the economic pain that disruption of this key supply chain can cause. One study estimates that the chip shortage during the pandemic likely contributed to worldwide revenue losses of over $500 billion from 2020 to 2022. The impact was particularly acute for the automotive industry. In 2021 alone, this single industry was estimated to have lost $210 billion in global revenue.

The US is taking a comprehensive approach to diversify and strengthen its semiconductor ecosystem. The US is first investing in its own domestic capacities through the CHIPS and Science Act. This law provides incentives for manufacturers to build fabrication plants in the US.

“But no country can or should do this alone. We are working with our partner countries to ramp up their investments as well,” explained Yellen. “For example, we have dedicated a new $500 million fund for international semiconductor and telecom projects under the CHIPS Act. This fund can help countries in the Indo-Pacific develop their own diverse and resilient semiconductor supply chains,” Yellen said.Last week saw Vietnam and the US forged a new semiconductor partnership to support resilient semiconductor supply chains for US industry, consumers, and workers.

Source: VIR