Hanoi (VNA) –🌼 Vietnam’s semiconductor manufacturing sector first began to take shape 45 years ago when a factory operated by the Ministry of National Defence started exporting electronic products. Today, many believe that Vietnam has a golden opportunity to develop its semiconductor industry in the modern era. But is now actually the best time for the country to develop this industry?

Dr. Nguyen Khac Giang, Visiting Fellow at the Vietnam Studies Programme of the Singapore-based ISEAS-Yusof Ishak Institute, said despite that foundation, had Vietnam embarked on the independent construction of a semiconductor system 45 years ago, it would have faced significant challenges in penetrating into a demanding and highly competitive new market.

According to Giang, the talk surrounding Vietnam’s suitability as a destination for semiconductor industry development emerged around 2021 when there was a significant demand for the application of electronic products in almost every fields. Vietnam has also embraced greater economic openness in the past decade, both in terms of trade and investment. “This favourable business environment has attracted investments from advanced technology industries, including semiconductor-related ventures,” Giang said. Csaba Bundik, MBA Founder of Tenjin AI, former director of EuroCham Vietnam, held that there is a significant surge of interest in the semiconductor industry these days, with increased attention and visits from various stakeholders. Governments from countries, including Vietnam, are actively discussing the industry as they recognise the skyrocketing demand for artificial intelligence. As a result, there is a growing focus on developing a supportive environment and ecosystem for this sector. “The semiconductor industry is poised to become a major future business both at the company level and on a national scale,” Bundik noted.

Having been in Vietnam for more than 15 years and active in helping foreigners to bring their projects and technologies to Vietnam and select Vietnamese companies to do business mainly in Europe, Bundik has observed significant changes in Vietnam’s economy and geopolitical landscape, which have been influenced by various factors, particularly the impact of COVID-19. “Vietnam is more and more open, more integrated in the liberal economy. The country has witnessed a notable influx of investors in recent years, both in terms of their numbers and the substantial investments.”

Vietnam is considered a stable and trusted partner. The government made necessary decisions when reopening up the country when it was deemed reasonable, which received a lot of positive opinions from overseas investors.

^{Csaba Bundik, MBA Founder of Tenjin AI, former director of EuroCham Vietnam}

Meanwhile, Giang highlighted that political trust plays a crucial role in attracting foreign investment, particularly in sectors like semiconductors. Countries such as the US, the Republic of Korea, India, and Australia demonstrate confidence in Vietnam due to its domestic political stability and diplomatic relationships.

Vietnam’s elevation of its comprehensive strategic partnerships with multiple countries such as the US, Australia, Japan, and the Republic of Korea over the last two years is very important, fostering friendly and conducive environments for semiconductor businesses to make investment.

^{Dr. Nguyen Khac Giang, Visiting Fellow at the ISEAS-Yusof Ishak Institute}

Vietnam’s proximity to China and its strategic location near other semiconductor hubs in East Asia, such as Taiwan (China) and the Republic of Korea, makes Vietnam an attractive choice, Giang went on. “Furthermore, Vietnam maintains positive and friendly relations with both the US and China, the two big semiconductor players in the world, making it a safe and stable investment destination." In addition to economic and political factors, experts pointed out Vietnam’s abundance of talented human resources and energy availability. The Vietnamese education system has been renowned for its emphasis on STEM (science, technology, engineering, and mathematics), providing a solid foundation for semiconductor development. Vietnam also possesses significant reserves of rare earths, ranking second globally. Notably, the tungsten mine in the northern province of Thai Nguyen holds immense importance in serving the semiconductor industry. These factors are compelling reasons why investors choose Vietnam over other countries, experts said.

Nevertheless, they held that Vietnam should not view the semiconductor development as a competition among nations, but as an opportunity for mutual support, cooperation, and development. “Collaboration between businesses, educational institutions, and government training facilities is crucial in developing a tailored human resource strategy for each industry or business,” Giang opined. To effectively meet the needs of businesses, it is essential to develop a comprehensive strategy, which should include attracting foreign direct investment (FDI) and fostering the growth of domestic semiconductor companies. He explained that while Vietnam has enjoyed benefits from hosting foreign semiconductor companies like Intel and Samsung, domestic enterprises have struggled to establish their footprint in the industry.

It would be advantageous to have domestic players like Viettel or FPT involved, even in a modest capacity, as it would contribute to securing Vietnam’s position within the supply chain, ensuring economic security, and bolstering the country’s geopolitical standing.

^{Dr. Nguyen Khac Giang, Visiting Fellow at the ISEAS-Yusof Ishak Institute}

Meanwhile, Bundik said that the semiconductor development is not a simple decision that can be achieved overnight. It requires the creation of an entire ecosystem, including investment in education and training to meet business demands. Collaboration between educational institutions and FDI enterprises is crucial to bridging the gap between academic training and industry requirements, Giang added. This collaboration also minimises unnecessary expenses and enables graduates to secure job positions without the need for extensive retraining or changing majors. By promoting innovation, investing in research and development, and cultivating local talent, insiders believe Vietnam can forge its own path to becoming a major player in the global semiconductor industry./.