Vietnam is making strategic moves to position itself in the global semiconductor industry, a sector that is becoming increasingly competitive due to the rising demand for artificial intelligence and automation technologies. However, entering this high-stakes field comes with significant challenges.

Four key challenges for Vietnam’s semiconductor industry

Experts have identified four major challenges that Vietnam must overcome to develop its semiconductor sector:

First, building a robust technical infrastructure and policy framework to attract investment and compete globally. Second, developing a highly skilled workforce, which is crucial for sustaining the industry. Third, attracting and integrating local and foreign enterprises into the semiconductor value chain. Lastly, determining which specific segments and products Vietnam should focus on to establish itself in the global semiconductor supply chain.

Associate Professor, Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics, highlighted the significant challenges facing Vietnam: “We need to build and execute a strategic transformation while simultaneously implementing breakthrough policies to accelerate progress.”

Vietnam’s strategic approach

Many countries, including Indonesia and Malaysia, are heavily investing in their semiconductor industries. While Vietnam lags in financial resources, it has successfully attracted key investors. However, most current investments are focused on testing and packaging rather than core research and development (R&D) or high-risk innovation.

To support this growth, Vietnam has enacted Resolution No. 57-NQ/TW, which prioritizes technological innovation and the digital economy. The government has also laid out a semiconductor development strategy through 2030, with a vision for 2050, aiming to make Vietnam a crucial link in the global semiconductor supply chain.

According to Minister of Planning and Investment Nguyen Chi Dung, Vietnam has actively engaged with leading technology firms such as Qualcomm, Google, Meta, LAM Research, Qorvo, and AlChip to facilitate supply chain transitions and expand R&D operations in Vietnam.

As of now, Vietnam has 174 foreign direct investment (FDI) projects in the semiconductor sector, with a total registered capital of nearly $11.6 billion. Notably, in late 2024, Vietnam signed a cooperation agreement with NVIDIA to establish an AI research and development center and a data center in the country.

This partnership is expected to create a significant technological breakthrough, attracting further investment in AI and semiconductor sectors in Vietnam.

Vietnam’s investment outlook

To sustain growth, Vietnam must leverage the opportunities presented by the Fourth Industrial Revolution, global economic shifts, and international integration. Strengthening industrialization, modernizing the economy, and advancing the digital and green economy are key priorities.

International media outlets such as Bloomberg, Nikkei, and CNBC have praised Vietnam’s progress in attracting semiconductor investment. Vietnam’s strategic positioning has drawn billions of dollars in commitments from major industry players.

For instance, Foxconn, the world’s largest electronics contract manufacturer, has invested $383 million in a printed circuit board factory in Bac Ninh, with an expected annual output of 2.79 million products. Intel has also invested over $1.5 billion in its Ho Chi Minh City facility, reinforcing Vietnam’s role in the semiconductor supply chain.

In addition to NVIDIA, major tech firms from South Korea and Taiwan (China) have established AI chip design research centers and offices in Vietnam. Japan’s Nikkei has even suggested that Vietnam could become a global semiconductor hub due to its rapid industrial transformation and government commitment.

The semiconductor race: A marathon, not a sprint

Despite Vietnam’s advantages, significant challenges remain, particularly in workforce development and technology access. According to Vietnam’s semiconductor development strategy, the country aims to train 50,000 engineers in the first phase and expand to 100,000 in later stages.

Taiwan (China) currently dominates the global semiconductor industry, holding a 50-60% market share in various chip production segments. Taiwan’s success is largely attributed to its skilled workforce and proprietary technology. Some estimates suggest that Taiwan supplies up to 90% of certain critical semiconductor components worldwide.

Nguyen Khac Lich, Director of the Information Technology Industry Department at the Ministry of Information and Communications, emphasized that Vietnam must gain technological autonomy to reduce reliance on foreign firms. A key objective is to establish a high-tech semiconductor manufacturing facility by 2030.

“A country without a semiconductor factory cannot be considered a semiconductor nation,” Lich stated.

Economist Pham Chi Lan echoed this sentiment, emphasizing that human resources and technology are fundamental to success. She noted that while the Vietnamese government is prioritizing investment in technology and venture capital, a long-term commitment is necessary to establish a solid semiconductor ecosystem.

“No nation will fully transfer semiconductor technology to Vietnam. At best, we may gain partial access. Without skilled workers, we won’t be able to capitalize on these opportunities,” Lan warned.

Vietnam’s path forward

Developing a robust workforce and enhancing semiconductor engineering education will be critical for Vietnam’s success in the industry.

“There is no shortcut to success. Achieving our semiconductor goals will require significant investment, strategic vision, and unwavering commitment,” Lan concluded.

Vietnam can learn from Malaysia, which capitalized on the US-China trade war to attract semiconductor investment. The state of Penang, in particular, has spent 50 years developing a world-class semiconductor hub, backed by strong government policies and infrastructure investment.

As the global semiconductor race intensifies, Vietnam must continue making bold investments in human capital, policy innovation, and infrastructure to secure its place in the industry. With abundant rare earth resources, a strategic geographic location, and a growing talent pool, Vietnam has the potential to become a key player in the global semiconductor supply chain.

According to Professor Nguyen Mai, Chairman of the Association of Foreign-Invested Enterprises, Vietnam must focus on its competitive advantages in electronics, digital technology, automation, and AI to fully integrate into the global semiconductor ecosystem.

Dan Viet