Vietnam-US Partnership Increases Possibilities for Growth in Semiconductor Industry

The United States and Vietnam have recognized the potential of Vietnam to become an important player in the global semiconductor industry. The two nations declared their joint commitment to the US-Vietnam Comprehensive Strategic Partnership with a view to strengthen the emerging semiconductor sector in the country. The announcement indicated that both the US and Vietnam highly value the growth of Vietnam's flourishing semiconductor ecosystem.

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Vietnam and US Firms Sign Three Memorandums to Enhance Semiconductor Industry

Vietnamese government bodies and US businesses have entered into three memorandums, aiming to improve the design and production of semiconductors and strengthen workforce training in the industry. The signing ceremony took place in Washington, US on September 19, 2023, and was attended by Vietnamese Prime Minister Pham Minh Chinh, US Ambassador to Vietnam Marc Knapper, and President and CEO of the Semiconductor Industry Association John Neuffer.

The National Innovation Center under the Vietnamese Ministry of Planning and Investment signed a memorandum with Cadence Design Systems to collaborate on semiconductor design and production. The center also signed a memorandum with Arizona State University to develop skilled human resources for the semiconductor industry.

Vietnamese Prime Minister Pham Minh Chinh (C, 2nd row) witnesses a ceremony for exchanging signed cooperation agreements between the Vietnamese side and a U.S. firm.
Vietnamese Prime Minister Pham Minh Chinh witnesses a ceremony for exchanging signed cooperation agreements between the Vietnamese side and a U.S. firm. (Photo: Duong Giang/VNA)

The Vietnamese Ministry of Education and Training also signed a memorandum with Intel to enhance the development of skilled human resources for the hi-tech sectors. Investment Minister Nguyen Chi Dung emphasizes the potential of Vietnam for the US, as it offers an ideal geographical location and a stable political system.

Vietnam aims to train 50,000 engineers in the semiconductor industry by 2030 and is committed to supporting its growth. According to Minister Dung, the government is strongly interested in developing the semiconductor industry.

Vietnam’s Semiconductor Industry in Focus

In a recent report by the US Census Bureau, chip imports from Vietnam increased by 75% in February compared to the previous year, reaching $562.5 million and capturing an 11.6% market share.

Research firm Technavioa has also predicted that the Vietnamese semiconductor market will grow at a compound annual growth rate of 6.12% between 2022-2027, with an estimated market size of $1.65 billion.

Vietnam offers significant potential for the semiconductor industry. The country attracts foreign firms and encourages domestic companies like FPT Semiconductor, CMC, and Viettel to engage in chip manufacturing. However, the industry faces challenges due to a shortage of skilled labor. Minister of Information and Communications Nguyen Manh Hung highlights the need to produce 10,000 semiconductor engineers annually, but the current rate is far below that.

Additionally, the industry values experience, which hinders the use of fresh engineering graduates. Addressing the workforce shortage requires a fresh approach that allows firms to effectively utilize new talent.

Potential of Vietnam’s Semiconductor Industry

The signing of the three memorandums between Vietnam’s government agencies and US firms in the semiconductor industry represents a significant step towards deeper collaboration and partnership. As a leading semiconductor manufacturer, the US partnership will enable Vietnam to build a robust semiconductor industry ecosystem, says Investment Minister Nguyen Chi Dung.

Several global tech giants have already invested billions of dollars in semiconductor chip production in Vietnam, aiming to tap into the country’s lucrative market.

Electronic circuit assembly and testing factory of Intel Products Vietnam Co., Ltd
Electronic circuit assembly and testing factory of Intel Products Vietnam Co., Ltd

Experts recommend that tech and electronic support industry firms make a greater effort to participate more deeply in the production chains and drive changes within the industry. Vietnam should focus on developing a strategy for training high-quality human resources and create policies that support technology transfer, especially in core areas, to manufacture Vietnamese-branded chip products.

Deputy Prime Minister Tran Hong Ha emphasized the importance of nurturing an electronics sector that includes a microchips and semiconductor industry. The government plans to amend science-technology and education-training bills to support research and development in core technologies. The goal is to position Vietnam’s semiconductor industry to exceed a value of $6.17 billion by 2024 and become a major player in the global semiconductor chip industry.

Phuong Nguyen