Hanoi aims for SEA's semiconductor hub despite supply chain limits

Vietnam is in the top 10 for semiconductor exports, with 6% annual growth projected until 2027.

Vietnam's capital Hanoi is taking steps to achieve its goal to become a hub for semiconductor production by 2050. This lofty ambition is part of Vietnam's National Master Plan for 2021-2030.

Vietnam envisions itself to become an upper-middle-income nation by 2030, buoyed by developments and investments in science, innovation, technology as well as digital transformation.

Given the existing US-China trade tensions on top of the growing global demand for chips, Vietnam is poised to develop as a semiconductor manufacturing hub.

Vietnam is already included in the top 10 in the world for the export of semiconductor devices and integrated circuits, with the industry predicted to grow at an annual rate of 6% until 2027.

Vietnam is also the third biggest semiconductor exporter to the US in 2023, reaching US$562m up from US$321m in 2022.

The Southeast Asian nation already has attracted several international semiconductor producers who have established operations such as Infineon Technologies AG, Amkor Technology Group, Samsung, Qualcomm, and Texas Instruments. 

Already, Samsung had invested a total of US$22.4b into the country’s high-tech sector.

Hana Micron Vina has committed to invest US$1b to boost Vietnam’s chip production by 2025. 

Nvidia, one of the largest semiconductor producers in the world, targets setting up a base in Vietnam with the company already having invested US$250m in the Southeast Asian nation.

Small contribution

Still, Vietnam's contribution is considerably small when the entire supply chain is considered. 

Vietnam mainly participates in the final stage of semiconductor production, focusing on assembly, testing, and packaging, and thus represents the lower value of the supply chain. 

The lingering challenge for the country is to elevate itself in the supply chain by developing its design and packaging capabilities to have greater influence in the global semiconductor industry.

Hanoi has distinct advantages that can position itself atop the semiconductor supply chain given that it is strategically located in the centre of the Red River delta.

The location is an important axis for political, economic, and scientific activities in Vietnam.  

Hanoi is also one of the leading localities for foreign direct investment (FDI). 

The city alone attracted US$1.7b in FDI in 2022, ranking it amongst the top seven destinations for FDI inflow in Vietnam.