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Vietnam has pledged tax breaks and other perks to semiconductor companies to help develop the sector as the south-east Asian country takes on an increasingly crucial role amid the China-US chip war.
Hanoi’s national plan will include industry grants through a science fund and joint state research with private tech companies such as FPT, the science minister said in an interview published on Monday.
Companies from Nvidia to Samsung are looking to expand their chip businesses in Vietnam, which is expected to receive millions of dollars from the US Chips and Science Act and already hosts Intel’s biggest global test and assembly factory.
“Vietnam’s semiconductor industry has a low localisation rate [and] research and development activities are not synchronised,” Vietnam’s science and technology minister Huynh Thanh Dat said in an interview on the official government website. “And high-quality human resources in the field of semiconductors is still limited.”
The export-based economy has missed out on billions in investment from the likes of US giant Intel and Austria’s AT&S, which both recently chose Malaysia for major manufacturing rollouts.
At the same time, Vietnam has attracted dozens of companies in the semiconductor field, and several more US groups would jump in if the country had enough renewable energy to meet their green goals, Jose Fernandez, US under-secretary of state for economic growth, energy and the environment, told Nikkei Asia.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
Vietnam needs to strike technology transfer deals with nations dominating the chip sector, Dat said. He did not specify the planned tax incentives but said Vietnam would sweeten policies to bring foreign experts into the workforce, which has faced a recent slowdown in foreign work permits.
Vietnam aims to train 50,000 engineers for the industry by 2030, and universities are unveiling semiconductor classes in partnership with employers such as Samsung. The country has a strong foundation for science and tech education, but a dearth of advanced skills has limited a broader march up the electronics value chain.
“There are many countries around the world who would love to have [Vietnam’s] ability to do assembly, testing and packaging,” Fernandez said on a visit to Vietnam. It has “the potential to become a powerhouse”.
He added the country was a top target for US Chips Act subsidies, which would be a “badge” of confidence. The dollar amount will be based on an assessment expected this month.
Washington and Beijing’s race for tech supremacy has pushed the semiconductor industry and related companies to seek third locations to avoid fallout. In December, Nikkei reported that Apple for the first time was shifting engineering resources to Vietnam for product development of the iPad.
Hanoi is signalling its dedication to the industry by adding it to two state programmes, according to Dat. One is the National Foundation for Science and Technology Development, which offers grants and other support. The second is the National Product Development Programme, a co-ordinated effort to create 10 competitive products by 2030, including for export.
A version of this article was first published by Nikkei Asia on February 12. ©2024 Nikkei Inc. All rights reserved.
