Industry News

Vietnam climbs the chip value chain

Vietnam climbs the chip value chain - Created date17/11/2022

The CEO of Samsung Electronics met with Vietnamese Prime Minister Pham Minh Chinh and announced a US$850 million investment to manufacture semiconductor components in Thai Nguyen province on 5 August 2022.

The investment will make Vietnam one of only four countries — alongside South Korea, China and the United States — that produce semiconductors for the world’s largest memory chipmaker. Vietnam’s selection over more developed locations speaks volumes about the country’s rising importance in the semiconductor value chain.

Vietnam’s industrial and technology policies have always granted the highest incentives for high-tech projects, including corporate income tax reduction and sales tax and land rent exemption. In 2020, as tech firms continued to exit China, Vietnam established a special working group to court high-tech investments by offering customised incentives beyond those specified by existing laws. Different Vietnamese prime ministers have met with executives of global tech giants to encourage investment in semiconductors.

Intel recently channelled an additional US$475 million into its assembly and test plant in Vietnam that produces core processors. Local tech corporations have similarly launched their own lines of low-end semiconductors for a wide range of applications. Such projects are laying the foundation for even more investments to come.

The next step for Vietnam is to go beyond attracting foreign direct investment to integrating multinationals into its economy. Weaknesses in the country’s investment climate — including backward infrastructure, weak intellectual property rights enforcement, cumbersome procedures, underdeveloped supplier networks and a shortage of local skills — must be urgently addressed.

Source: East Asia Forum