Vietnam is making a bold move into the global semiconductor industry with the recent approval of its first wafer fab construction project. Slated for completion by 2030, this VND 12.8 trillion (approximately $500 million) initiative marks a pivotal moment in the country’s strategic push to become a significant player in the semiconductor market. The fab, expected to produce specialized chips for defense, AI, and high-tech applications, will receive substantial government support, including direct financial backing of up to 30% of the total investment and tax incentives. A special steering committee, led by the Prime Minister, will oversee the project, ensuring coordinated efforts and resource allocation.
This development is the culmination of years of strategic planning and negotiations. In 2023, Vietnam engaged in discussions with major chip companies from the U.S., South Korea, and other regions, aiming to secure investments and technology transfers. Although specific company names were not disclosed, reports suggested that negotiations involved U.S.-based GlobalFoundries and Taiwan’s Powerchip Semiconductor Manufacturing Corp. (PSMC). These efforts underscore Vietnam’s commitment to establishing a robust semiconductor ecosystem.
The approval of the wafer fab project aligns with Vietnam’s ambitious Semiconductor Industry Development Strategy and Vision for 2030-2050, announced in September 2024. This strategy outlines a three-phase roadmap to position Vietnam as a global semiconductor hub. The first phase, spanning 2024 to 2030, focuses on leveraging the country’s geographical and human resource advantages to attract foreign investment and build foundational capabilities. The goal is to establish at least 100 chip design companies, one semiconductor manufacturing plant, and 10 packaging and testing facilities.
In the subsequent phase, from 2030 to 2040, Vietnam aims to expand its semiconductor footprint significantly. The country seeks to become one of the global centers for electronics and semiconductors by increasing the number of design companies to 200, establishing two semiconductor chip manufacturing plants, and setting up 15 packaging and testing facilities. This phase will focus on developing independent semiconductor product design and production capabilities.
Looking further ahead, the third phase, from 2040 to 2050, envisions Vietnam as a leading semiconductor and electronics nation. The country plans to establish at least 300 design companies, three semiconductor chip manufacturing plants, and 20 packaging and testing facilities. The semiconductor industry’s annual revenue is projected to exceed $100 billion, with a value-added ratio of 20-25%. Similarly, the electronics industry’s annual revenue is expected to reach $1.045 trillion, with a comparable value-added ratio.
To achieve these ambitious goals, the Vietnamese government has introduced a suite of incentives, including tax breaks, land-use benefits, and power supply guarantees. A National Semiconductor Development Steering Committee, led by the Prime Minister, will coordinate these efforts, ensuring a focused and strategic approach.
However, Vietnam’s semiconductor ambitions are not without challenges. Industry experts caution that building an advanced wafer fab can cost up to $50 billion, far exceeding the budget for the current project. John Neuffer, President of the U.S. Semiconductor Industry Association (SIA), advised Vietnam to prioritize strengthening its existing chip packaging and testing capabilities rather than rushing into advanced semiconductor manufacturing. Yet, Vietnam remains undeterred, aiming to leapfrog ahead by attracting foreign investment and technology while supporting local players like Viettel to build a comprehensive semiconductor ecosystem.
Despite the daunting challenges, Vietnam’s optimism is bolstered by its strong position in the midstream and downstream semiconductor sectors. The country currently hosts 174 foreign semiconductor-related projects, with a total investment of nearly $11.6 billion, forming a robust packaging and testing hub. Major players like Intel, Amkor Technology, Hana Micron Vina, and PSMC have established significant operations in Vietnam.
Vietnam is also actively developing AI and compound semiconductors. In December 2024, NVIDIA signed an AI cooperation agreement with the Vietnamese government, planning to establish an AI R&D center and data
