VietNamNet Bridge – Given the chip industry development program until 2020, HCMC has received much expert support for chip research and design whereas there is concern about investment in chip production. On the sidelines of an e-government seminar in Hanoi City last week,  - The Saigon Times Daily spoke with Le Manh Ha, vice chairman of HCMC and head of the city’s steering committee for the 2013-2020 chip development program, over the need to invest in chip manufacturing factories in the city. Excerpts:

The world’s chip industry has gone through 50 years of development. Even Qualcomm, a giant chip producer in the U.S. that has turned out over 11 billion chips, is now just investing in research and design while using outsourcing services for production. Many experts say Vietnam should invest in research and design only, not in production. What do you think?

Le Manh Ha.

The experts are not really right because the market now has very strong demand. Vietnam each year has to import a vast amount of chips for production of mobile-phone simcards, bank cards and automobile black boxes. So why don’t we invest in chip production plants?

Investment in chip production plants will not only serve commercial purposes but also help ensure security requirements. Viettel has announced that it can produce military equipment. However, security is not ensured if the chip, the control center, is imported.

Some say that if Vietnam produces chips, technical barriers must be built up to help secure consumption as local products cannot compete with imported chips in terms of functionality and price. But it is also impossible to set up technical barriers against imported products.

- It is normal to set up technical barriers. For State-owned enterprises, it is possible to ask them to use locally-made chips for security reasons.

Why don’t we develop chips and hire the plant of Intel in Vietnam for production?

- Hiring production factories means overseas production. Therefore, security issues cannot be ensured.

Can you comment on the state of the chip industry development program of HCMC? When will investment in production plants begin?

- HCMC is focusing on pilot research and design. Experiences of other countries have shown that strong participation of the State is necessary to ensure success. It may cost hundreds of millions of U.S. dollars to invest in a chip production plant while the technology industry is undergoing fast changes. Therefore, the city is considering the plan carefully as it is a risky venture, investing in chip production plants.

The city is studying the most feasible factory. Initially, the city may invest in a small-scale plant to approach the market, obtain its first targets and minimize risks.

Can you compare risks of investment in chip production plants with other factories?

- Riskier but with more opportunities. Investment in many factories will result in a revolution in the industry as chips are necessary for any electronic devices. The chip is the most important part. If we don’t invest in design and production, we will only provide assembling and outsourcing services forever. These activities will collapse sooner or later.

In addition, investment in the chip industry will bring about benefits for both the hardware and software sectors. As each chip is designed for a certain software product, local enterprises will have good conditions to join the software industry.

Research and development is the most important step in the chip industry and to conduct this step well, human resources must be strong. What do you think about domestic manpower?

- Vietnam has strong potential for human resources inside and outside the country. We have overseas Vietnamese working in Silicon Valley in the U.S. Many Vietnamese have created inventions in the industry. I think that manpower training is very important and the city should focus on this.

Some say that it is too late for Vietnam to join the chip industry. Even in Taiwan, which is a strong player in the chip industry, many enterprises have gone bankrupt?

- Actually it is very difficult to become a leading player in the industry but we still have to join the playground to meet domestic demand and serve national defense and the consumer market. We don’t aim at the mobile phone market where there are too many competitors.

Source: SGT