Having Vietnam join the world’s semiconductor supply chain is a major change in the world of manufacturing and technology. During the last ten years, instead of focusing mostly on low-cost goods, Vietnam has joined the ranks of important players in the semiconductor industry. The change is mostly caused by government policies, FDI, events in world trade, and the rising need for semiconductors across the globe. With supply chains trying to become more varied to avoid risks and remain strong, Vietnam’s climb in the sector indicates that it aims to challenge the dominance of a few main players.
The country’s steps into the semiconductor field are mainly supported by its desire to reach prosperity by moving toward industry, improving technology, and being active in the global market. Starting in the middle of the 1980s with the Đổi Mới reform, Vietnam started allowing foreign companies and increased exports from manufacturing. Lately, the country began attracting multinational businesses by building on its benefits like an inexpensive labour force and improved infrastructure. Little by little, the ecosystem found its way into manufacturing electronics, a process that led to the development of semiconductor activities.
A main reason for the growth of Vietnam’s semiconductor sector is the arrival of major companies and manufacturers investing in the country. Firms including Samsung, Intel, and a few others have opened factories in Vietnam where they make, test, and package semiconductor parts. The Samsung factories in Ho Chi Minh City, where huge numbers of smartphones and electronics are made with important semiconductor work, are especially notable. According to Intel, its increased investments in Vietnam imply that the country is building strong skills in the semiconductor sector.
Because of where it is in Southeast Asia, Vietnam draws many semiconductor manufacturers. Being in the middle of Chinese, Japanese, South Korean, and Taiwanese markets, Vietnam is a great place for companies to spread their supply chains. In times of increased trade and political challenges in the Asia-Pacific, this advantage has become very important for Australia. Firms wanting to avoid risk from over-dependence on China or Taiwan are choosing Vietnam as another place for their semiconductor operations.
Big changes in the agricultural sector have been possible in Vietnam due to government backing. The government of Vietnam appreciates the role of semiconductors in their strategy and has introduced different policies to lure high-tech investors. They consist of giving large tax discounts, smoothing administrative work, making industrial parks for electronics and technology, and supporting training programs to develop qualified labour. Investment in improving the power supply and transportation system by the government makes it easier for semiconductor factories to operate.
Moreover, Vietnam taking part in several free trade agreements has allowed it to fit better into the world’s supply system. Such arrangements as the CPTPP and EVFTA have allowed Vietnamese goods easier sale in other markets, while cutting down their export costs. Because of FTAs, companies producing semiconductors in several countries choose Vietnam as their manufacturing site, making the country an essential element in semiconductor chains world over.
Vietnam’s rise shows that the semiconductor industry is experiencing similar changes across the world. Because of growing demands for chips in various sectors, the industry is making major changes. The rise in demand for semiconductors has made countries try harder to attract firms wanting to make them. When COVID-19 caused problems in supply chains, people noticed how much manufacturing is concentrated in some places, which led companies to search for alternatives. The country’s steady political system, affordable costs, and upgrading technology make Vietnam the ideal fit for global changes.
While things are heading in the right direction, Vietnam’s semiconductor sector still encounters difficulties that need to be resolved. Making advanced microchips and wafers in semiconductors is done using modern and dedicated technology, large investments, and strong expertise. Right now, Vietnam’s activities in semiconductors focused on assembly, testing, and packaging, not on key processes such as wafer fabrication, which are mainly handled by Taiwan, South Korea, and the United States. To deal with this technological gap, a lot of money is needed for R&D, developing the workforce, and creating local networks of suppliers.
Besides, Vietnam must improve its value proposition since other developing countries in Southeast Asia such as Malaysia, Thailand, and the Philippines are also in competition. Despite cheaper labour, tools and technology used in automating and improving manufacturing can slowly reduce such cost benefits. To maintain a competitiveness, Vietnam should work on enhancing productivity, promoting innovation, and creating groups of semiconductor companies able to bring in and hold on to talented workers and investments.
We should also pay attention to how semiconductor manufacturing affects the environment. Since environmental and social rules around the world keep getting stricter, Vietnam must follow green manufacturing and take steps to ensure responsible management of its supply chains. Managing the country’s fast-growing industry to be sustainable will help the semiconductor industry become respected and useful to investors.
Soon, Vietnam seems to be headed in the right direction regarding the semiconductor supply chain. ongoing efforts in education, for example, STEM and technical training, can build a skilled group of people capable of supporting new semiconductor activities. Improvements in infrastructure and steady policies by the government will keep a good business environment for companies in the semiconductor industry. In addition, as companies try to manage risks by expanding in different regions, Vietnam’s experience and position are seen as very attractive for them.
Moreover, Vietnam is slowly raising its involvement in studies and new developments related to semiconductors. Cooperations between universities, research centres, and industry are just starting, helping to support the growth of the semiconductor design, materials science, and process technology arena. While things are just beginning, this stands for Vietnam’s goal to become involved in more advanced parts of the world for semiconductors as time goes on.
How Vietnam has grown in the semiconductor industry illustrates big changes happening in geopolitics and the world economy. As COVID-19 showers new importance on global supply chains, countries such as Vietnam are standing out because of their excellent advantages, location, and full backing from the government. Although there are still some challenges, Vietnam’s involvement in the global semiconductor sector is evidence of the nation’s focus and changes taking place in world technology production.
Vietnam’s growing role in the world’s semiconductor industry shows how the industry and production geography are evolving over time. Thanks to wise investments, helpful policies, and world economic trends, Vietnam has become important in semiconductor assembly, testing, and packaging. When the country keeps improving its strengths and infrastructure, and the chip sector spreads across the globe, Vietnam is preparing to play a bigger role. The industry will do well if it handles innovations, workforce management, and changing competitive factors in the world around it. To sum up, Vietnam’s progress in semiconductors demonstrates that strategic planning and flexible growth can help emerging countries climb in the world’s technology ranks.
