* Overview of the semiconductor production industry in Vietnam
According to market research released by Technavio, the world’s leading technology research and consulting company, the semiconductor market in Vietnam is expected to grow by $1.65 billion at a compound annual growth rate, about 6.52% in the period of 2021 – 2025.
In fact, over the past 10 years, there have been many foreign enterprises investing in the field of microelectronics such as Intel Corporation, Jabil, Sonion, Datalogic, GES… in Ho Chi Minh City High-Tech Park.
The case of Intel:
In 2006: Intel invested USD 1 billion to build a state-of-the-art chip assembly and test production facility in Ho Chi Minh City’s Hi-Tech Park.
By the end of 2020, Intel Products Vietnam has brought more than 2 billion products to customers around the world.
In January 2021: Intel Corporation invested an additional USD 475 million in Intel Products Vietnam for phase 1 of the largest cleanroom assembly and testing (ATM) factory in the global Intel system.
May 2022: Intel Group CEO Patrick Gelsinger was invited by the Prime Minister to visit the Government Office. Intel Group confirmed that during the investment process in Vietnam, the group realized that Vietnam has an industrious and innovative workforce and strong support and facilitation from the Government. Therefore, Intel decided to continue to further invest in Vietnam in the future.
These show the confidence of Intel in the domestic human resources as well as the stable investment environment of Vietnam.
Corporations like Microchip, Renesas, Applied Micro (AMCC), Marvell, Arrive Technologies, eSilicon, Sigma Designs, Uniquify… also operating in Vietnam and specializing in outsourcing and designing semiconductor and embedded software in the area. Most of the big corporations moved their production from China or Malaysia to Vietnam due to the country’s low labor costs and government’s support.
Domestically, Vietnam has Saigon Industry Corporation is in the process of preparing to invest in a chip factory project or Viet My Quantum Optical Research and Development Company Limited is manufacturing and exporting power semiconductor products (wafer FRED 200V, wafer Schottky Diode…) to foreign partners.
With the permission of Ho Chi Minh City People’s Committee, Ho Chi Minh City Semiconductor Circuit Technology Association was established in 2013. HSIA operates in the field of research, training, dissemination, application, production, sales and service of semiconductor industry in Ho Chi Minh City
* Legal Framework re Semiconductor
Decision No. 439/QD-TTg dated April 16, 2012 approving the “List of national products implemented from 2012 under the National Product Development Program to 2020”, which identifies and specifies “semiconductor” as one of the 9 key development products of the country.
The Government also issued Decision No. 66/2014/QD-TTg on “List of high technologies prioritized for development investment” and “List of high-tech products encouraged for development”, in which specifies technologies for designing and manufacturing semiconductor and semiconductor devices on the list of hi-tech prioritized for development investment and the list of hi-tech products encouraged for development.
In addition, the Government adopts key State-level programs like the National Science and Technology Program, the National Science and Technology Development Funds and the National Fund for Technology Innovation, chaired by the Ministry of Science and Technology, to support many research activities and trial production of semiconductor products.
Ho Chi Minh City is the leading and only locality that has issued a complete semiconductor industry development program. The People’s Committee of Ho Chi Minh City has approved the Microchip Industry Development Program, period 2013 – 2020 including 10 projects/component projects under Decision No. 6358/QD-UBND dated December 14, 2012 and Decision No. 1780/QD-UBND dated 17/04/2015.
However, up to now, Vietnam still does not have a true microchip (electronic chip) factory. Foreign-invested enterprises mostly carry out the outsourcing and designing (outsourcing) stages of microchips or assembling – testing (back-end).
* Why Vietnam?
As time passed by, more international organizations shifted their production to Vietnam due to its strategic location and advantages in shipping, competitive labor and production costs. Most recent of all, it is because enterprises in Vietnam can reap various benefits under 13 free trade agreements that Vietnam is a signatory. Vietnam has one of the most number of FTAs in the world – and most in the region. Singapore has only 6 FTAs, Malaysia has only 7.
Most recently and notably, the EU-Vietnam Free Trade Agreement (EVFTA) and the CPTPP grant favorable market access and investment conditions for foreign investors wishing to do business in Vietnam. For example, under the Agreements’ tariff schedule, base rate is 0% for almost all products in the semiconductor manufacturing sector.
Based on all the facts stated above, it is apparent that Vietnam is an ideal destination to carry out semiconductor manufacturing.
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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com if you have any questions. Dr. Oliver Massmann is General Director of Duane Morris Vietnam LLC.