Global semiconductor makers are betting on Vietnam as their next production destination with the country being considered ready for a move up in the value chain.
The U.S.'s Synopsys, one of the world’s biggest chip design software companies, is set to invest in and shift its engineer training to Vietnam, Nikkei Asia reported last month.
A closeup of computer chips.
It will train engineers and provide software licenses for a chip design center at the Saigon Hi-Tech Park.
Synopsys has two offices each in Ho Chi Minh City and Da Nang with more than 400 employees and plans to add another 300-400.
Last month CEO of South Korea’s Samsung Electronics, Roh Tae-moon, told Prime Minister Pham Minh Chinh that his company is working to test manufacture ball grid array products at its plant in the northern Thai Nguyen Province, and start commercial production in July 2023.
Samsung, the biggest foreign direct investor in Vietnam, has completed 85% of its research and development center in the country and hopes to complete it by the end of the year.
Another South Korean company, Amkor Technology, earlier this year signed a deal to set up a US$1.6-billion semiconductor materials manufacturing factory in the northern province of Bac Ninh.
Amkor, a supplier to top electronics companies like Qualcomm, Samsung and NVIDIA, will open the plant by the end of next year.
Other semiconductor manufacturers like U.S. giant Intel and Japan's Renesas Electronics have been in Vietnam for years.
The production of semiconductors in Vietnam signals that foreign companies are supporting the country’s manufacturing sector and driving an increase in the complexity of products made here, investment firm VinaCapital’s chief economist, Michael Kokalari, said.
"The primary motivations for firms to set up high-tech factories in Vietnam include Vietnam’s high-skill, low-wage work force and the country’s geographic proximity to high-tech supply chains in Asia," he said in a recent note.
This would, in the long run, benefit Vietnam’s long-term economic prospects, he said.
"We expect the ‘imported content’ of Vietnam’s exports to plunge and the ‘local content’ contribution to soar as local firms develop their ability to supply FDI companies with production inputs in the years ahead."
Robert Li, Synopsys sales vice president for Taiwan, Southeast Asia and India, told Nikkei that Vietnam could climb the value chain by designing integrated circuits for refrigerators and air conditioners.
Do Khoa Tan, deputy general secretary of the Vietnam Electronics Industries Association, said the entry of global semiconductor makers is putting the country in the high-tech spotlight.
The production of semiconductors requires large investment and human resources, and the engineers trained by Vietnamese universities in semiconductor designing are yet to be absorbed by industry, he told the media.
Dang Luong Mo, a microchip engineer in Japan, said there are thousands of good semiconductor engineers in Vietnam who are making chips for companies in the U.S., Taiwan, Japan, South Korea, and elsewhere.
The increased investment by multinationals would ensure that the chips made in Vietnam find buyers in the global market, he added.