The Vietnamese government has approved financial support of VND12.8 trillion ($500 million) for the construction of the country's first wafer fab, according to Vietnamnet, an online newspaper under the Ministry of Information and Communications. This marks an important step in developing Vietnam's domestic chip industry and ensuring supply chain resilience. According to the plan, the VND12.8 trillion (about $500 million) factory will be operational by the end of 2030, focusing on mature process chip manufacturing in automotive, telecom, and other sectors.
Triple policy incentives to attract investment
To promote the project, the Vietnamese government has launched three core support measures: a capital subsidy of up to 30% (capped at VND10 trillion) for enterprises that start production on time; allowing enterprises to retain 20% of their taxable income for reinvestment in technology; and granting special permission for the direct allocation of land-use rights without the need for public auctions. Prime Minister Pham Minh Thanh will personally supervise the selection of private partners, and local tech giants Viettel and FPT have made clear their intention to participate.
Building clusters in phases
Vietnam's semiconductor development strategy is divided into three phases: 2024-2030 is the basic construction period, with the goal of attracting 100 design companies, one wafer fab and 10 packaging and testing factories; from 2030-2040, it plans to add two new wafer fabs, realizing an annual revenue of 50 billion U.S. dollars; and from 2040-2050, it will ultimately form an industrial cluster of 300 design companies, three wafer fabs and 20 testing and testing factories, with the goal of annual revenue exceeding $50 billion. By 2040-2050, it will eventually form an industrial cluster of 300 design companies, 3 wafer fabs and 20 packaging and testing factories, aiming at an annual revenue exceeding 100 billion US dollars, and building a complete independent semiconductor ecosystem.
Strong foundation of packaging industry
At present, Vietnam has formed a strong semiconductor packaging and testing capacity, with the annual production capacity of Intel, Amkor Technology and other enterprises in Vietnam exceeding 4 billion chips. 2023 Vietnam's semiconductor exports amounted to 7.53 billion U.S. dollars, of which more than half is exported to the U.S., ranking as the third largest supplier of chips to the U.S. Amkor Technology's Bac Ninh plant has been recently expanded to a new factory in the U.S.. Anchor Technology's Bei Ninh plant has recently invested an additional $1.07 billion to triple its production capacity to 3.6 billion chips/year.
Opportunities and challenges under geopolitical games
Vietnam's move comes at a time when the global semiconductor supply chain is being restructured, and the U.S.-China trade friction has prompted companies to seek capacity diversification. The U.S. has positioned Vietnam as a “key supply chain partner”, and Japanese and Korean companies have also accelerated the layout. However, the construction of advanced wafer fabs faces multiple challenges: the cost of a cutting-edge factory exceeds $50 billion, and Vietnam's initial investment is only $500 million; at the same time, it needs to cope with the global competition from giants such as TSMC and Samsung, as well as the shortage of high-end talent.
Increased regional competition
Southeast Asian neighbors Thailand, Malaysia, Singapore and India are increasing the size of semiconductor investment. Vietnam's Ministry of Information and Communications said it will strengthen competitiveness through tax incentives, R&D subsidies and international cooperation. The country plans to set up a national semiconductor steering committee, and promote green manufacturing standards to ensure sustainable development of the industry.
Although Vietnam will still rely on foreign technology in the short term, through the construction of the first fab, Vietnam is expected to gradually master chip manufacturing technology, laying the foundation for the realization of technological autonomy in 2050. With the deepening of the global industrial chain adjustment, whether Vietnam can break through in the semiconductor race is worth continuing to pay attention to.