List of high-quality authors
Executive Summary:
Vietnam, which is ambitious, wants to take advantage of the United States' chip suppression of neighboring countries to become a leader in the global semiconductor chain. On the surface, Vietnam's ambitious chip program seems to be booming against the backdrop of an influx of foreign capital. The shortage of semiconductor engineers is constraining the development of Vietnam's chip industry. The energy instability of the technology manufacturing center in the north of the country is challenging the development of the semiconductor industry. Whether Vietnam has enough time to compete with regional challengers for investment.
1. Vietnam, which is ambitious, wants to take advantage of the opportunity of the United States' chip suppression of neighboring countries to become a leader in the global semiconductor chain.
With the intensification of geopolitical tensions, Vietnam plans to take advantage of the opportunity of the United States to suppress the chip industry of neighboring countries, and at the same time, in order to reduce the risk of ** chain from neighboring countries, it has decided to focus on the development of the semiconductor industry and become the third semiconductor power after Taiwan, China and South Korea.
And the United States seems willing to help Vietnam in order to increase competitors in China's semiconductor industry. On September 9, 2023, Joe Biden of the United States** said at a joint press conference with General Secretary of the Communist Party of Vietnam Nguyen Phu Trong, "We are deepening cooperation on critical and emerging technologies, especially around building a more resilient semiconductor ** chain." ”
During Biden's visit to Vietnam, the two countries agreed to establish a comprehensive strategic partnership at the highest level in Vietnam's diplomatic hierarchy. Helping Vietnam develop its semiconductor industry is at the heart of the historic upgrade in relations between Vietnam and the United States.
At the end of September 2023, on a sunny afternoon in California, Vietnam, taking advantage of Biden's visit to Vietnam, Vietnamese Prime Minister Pham Minh Chinh visited Silicon Valley and frequently courted semiconductor companies such as Synopsys and Nvidia.
So far, Vietnam has set its goal of becoming a leader in the global semiconductor chain.
To this end, Vietnam has also made a series of efforts to attract investment and semiconductor industry policies.
The first is to encourage collaboration with technology companies across Vietnam to usher in a "wave" of investment, aimed at boosting research and attracting talent to the semiconductor industry.
Second, the country's Minister of Science and Technology, Hoang Thanh Da, announced in January 2024 that Vietnam** decided to implement tax incentives for high value-added products such as semiconductors.
Second, on the surface, Vietnam's ambitious chip program seems to be booming in the context of an influx of foreign capital.
With the U.S. CHIPS Act restricting U.S. technology companies from continuing to invest in Chinese mainland, U.S. chip companies appear to be making some investment options that align with Washington's industrial policy agenda.
CNBC reported that Nvidia co-founder and CEO Jensen Huang visited Hanoi in early December 2023, during which he referred to Vietnam as Nvidia's "second home" and promised to expand partnerships with local companies and set up production bases in the country.
Nvidia, which has a market capitalization of more than $2 trillion last week, said it plans to invest hundreds of millions of dollars to build chip factories in Vietnam. Two months after Huang left Vietnam, Nvidia has invested $12 million in land for the factory.
Amkor, headquartered in Arizona, USA, has been operating a $1.6 billion chip factory in northern Vietnam since October 2023. Meanwhile, Delaware-based Marvell also announced in May 2023 that it would establish a semiconductor design center in Vietnam.
South Korean companies have also joined the craze. Samsung, Vietnam's largest investor, announced in August 2022 that it would invest $3.3 billion to produce semiconductor components in the country.
Hana Micron Vina, a South Korean manufacturer specializing in chip packaging and memory products, is building its second factory in Vietnam and plans to invest $1 billion in the country by 2025, Nikkei Asia reported.
Coasia Semi, a South Korean chip design company, opened a branch in Hanoi, Vietnam, as early as 2022.
Third, the shortage of semiconductor engineers is restricting the development of Vietnam's chip industry.
However, Vietnam also faces a number of obstacles, starting with a limited number of semiconductor engineers.
According to the U.S.-ASEAN Business Council, Vietnam has about 5,000 engineers trained in semiconductors, but in the next five years, it will need as many as 20,000 engineers.
Zachary Abuzacha, a professor at the National War College in Washington, D.C., said, "When companies and companies go to look at Vietnam, on paper, it's really good, but when they actually have to look at the infrastructure and most importantly the human resources, I don't think Vietnam can be a productive country for them." ”
According to Abuza, chip companies "are all competing for this very small and tight labor market." Vietnam must increase the number of semiconductor engineers by 5 times per year to do this".
Of course, Vietnam** is taking steps to address this issue. Nguyen Thanh Yen, chief engineer at the Hanoi branch of South Korean chip design company Coasia Semi, said that the Vietnamese authorities have realized their labor shortage and are actively planning special projects to take the lead in promoting the training of more engineers.
Just over a month ago, Vietnam's leader Pham Minh Chinh instructed four ** departments in Hanoi to add tens of thousands of Vietnamese engineers who can engage in semiconductor production.
Nguyen Thanh Yen is optimistic about Vietnam's ability to cope with the challenge of a shortage of semiconductor engineers. He believes that Vietnam excels in mathematics and science, and its 20 technical universities are launching semiconductor training programs, with the goal of adding 50,000 semiconductor engineers to the country by 2030.
Outside forces are also helping Vietnam solve the shortage of semiconductor engineers.
During his visit to Vietnam, Biden announced $2 million in seed funding for semiconductor industry training in Vietnam.
Bruno Sivanandan, co-chair of the Vietnam-European Chamber of Commerce Digital Sector Committee, said that Europe could be the next major participant in Vietnam's semiconductor industry training.
"It will facilitate the establishment of partnerships between Vietnamese and European academies to support the education of Vietnamese workers," Sivanandan said. Vietnam has a huge potential that has yet to be realized, and as a result, large corporations are looking to Vietnam. ”
It is true that Vietnam has the advantage of young human resources, and the easiest areas to help them earn money are usually the technology field. Semiconductors are now becoming hot. This will certainly attract enough young people to study in the industry. However, it usually takes 3-4 years to train a qualified semiconductor engineer, and it is difficult to quench the thirst of the near water. It can be said that the shortage of semiconductor engineers will at least delay the pace of development of Vietnam's semiconductor industry.
Fourth, the energy instability of the science and technology manufacturing center in the north of the country is challenging the development of the semiconductor industry.
Energy insecurity is also a major challenge for Vietnam.
Northern Vietnam relies heavily on hydroelectric dams, which can dry up during the hottest months of the year, when demand for electricity is highest. At the same time, Vietnam's infrastructure is outdated and in need of updating, and it lacks the grid capacity and power resources needed to address the problem.
Vietnam, for example, experienced its hottest summer to date last year, during which the northern part of the country experienced intermittent power outages. In early June last year, the weather in Hanoi was unusually hot during a power outage, and some families were forced to escape the heat in caves near the city center.
For several weeks, factories in the industrial park in northern Vietnam were shut down for several hours every afternoon. This caused the plant to have to stop production because there was no energy for about 4 to 5 hours in the middle of the day**.
Both Samsung and other South Korean factories were in a huge crisis, as they had to shut down factory operations altogether due to a lack of electricity.
In the aftermath of the power outage, Vietnamese authorities launched an investigation into EVN, the country's state-run power company. Eventually, disciplinary action was imposed on 161 EVN personnel due to power shortages.
The instability of electricity reflects the staggering potential of Vietnam for investors, and the contradiction between their real problems. After all, chip factories and all the high-tech products that Vietnam wants to make rely on very stable electricity, but Vietnam lacks this kind of electricity**.
In addition to energy instability, Vietnam's carbon emissions are also a major concern for European investors.
Under the terms of the EU's agreement with Vietnam, European companies doing business with Vietnam must comply with increasingly stringent carbon emission regulations, which could pose serious problems as long as the country relies heavily on coal.
To do business with Europe, you have to meet strict requirements in terms of carbon emissions. At the current level of carbon emissions in Vietnam, it will become a major obstacle for Europe to invest in Vietnam's semiconductor industry.
Fifth, whether Vietnam has enough time to compete with regional challengers for investment.
There is no doubt that the global push to diversify the semiconductor chain is consistent with Vietnam's development goals. The semiconductor industry is seen as a very important industry that can help Vietnam transform its economy and transform it into a developed high-income economy by 2045. From the perspective of timing and strategic layout, it is now beneficial for Vietnam to develop this industry.
But in Southeast Asia, there are not many opponents competing for the chip industry.
Malaysia and Singapore, for example, are strong competitors, while Indonesia and Thailand are also pursuing this area.
India has also regarded the chip industry as an important part of the "Make in India" economic strategy, and Modi has also frequently extended olive branches to global semiconductor giants and technology consumer goods giants in the past two years, and has achieved good results. For example, Apple's investment in India has been several times that of Vietnam, and more semiconductor parts companies in Apple's production chain have invested in India.
Semiconductors and artificial intelligence are likely to become the leaders of the technology cycle that will lead a new round of creating consumer content and driving economic growth, so almost all countries are looking for opportunities to establish themselves in the global chip chain.
It can be said that semiconductor is an industry full of development opportunities, and at the same time, it is an extremely competitive industry. To gain a foothold and appeal in this industry, it may not only depend on investment, semiconductor engineers, and stable power, but also on open-mindedness, free competition, and a tolerant and tolerant environment that is sufficiently friendly.
Author: Xu Sanlang].