Vietnam is Aiming to Become a Semiconductor Manufacturing Nation

[TheLostSwede]

According to a news post by Reuters, Vietnam is the latest nation that is trying to become a semiconductor manufacturing nation, albeit its plans are nothing like what China is doing, instead the nation is trying to woo existing semiconductor companies to build fabs in Vietnam. The nation has been building its high-tech industry over a few years now and although it's nowhere near some of its neighbouring nations, Vietnam is likely to become an important player when it comes to assembly in the not too distant future, alongside India. However, fabricating semiconductors is a big leap from assembling smartphones, computers and EVs and requires a highly skilled workforce, something which is already becoming an issue in nations like Taiwan and Singapore.

Reuters reports that Vietnam has approached both GlobalFoundries and Taiwanese Powerchip Semiconductor Manufacturing Corporation, or PSMC for short. PSMC is among the top 10 foundries in the world, despite only having a mere five fabs, all of which are located in Taiwan. PSMC's main focus is the automotive industry and might be the more likely candidate to consider Vietnam of the two. Neither company has made any kind of commitment to invest in Vietnam. However, building a fab in a nation that doesn't have a semiconductor industry brings with it several challenges, least not supply chain related ones. Reuters mentioned a speech by Synopsys VP Robert Li which he held at the Vietnam Semiconductor Summit, where he mentions that building a foundry in Vietnam might cost as much as US$50 billion, which doesn't seem like a very appealing proposal to any company considering opening up a foundry in the nation.



View at TechPowerUp Main Site | Source

 

[TechLurker]

I could see maybe PSMC, since Vietnam is slowly entering the wider automotive market via VinFast and their EV lines. As well, Vietnam has slowly built up their technology capabilities over several decades with assistance and cross-training from Japan, and have been gradually producing more and more advanced electronic systems over time. Still, I definitely agree that there will be some teething issues until a stable supply and logistics chain is available.

 

[natr0n]

Vietnam is also probably the nail salon capital of the world.

 

[TheLostSwede]

I could see maybe PSMC, since Vietnam is slowly entering the wider automotive market via VinFast and their EV lines. As well, Vietnam has slowly built up their technology capabilities over several decades with assistance and cross-training from Japan, and have been gradually producing more and more advanced electronic systems over time. Still, I definitely agree that there will be some teething issues until a stable supply and logistics chain is available.

Yeah, there are a lot of practical concerns that would have to be covered before any semiconductor company would consider building a fab there, but we might end up seeing a gradual building up test and packaging plants first, much like the kind of businesses that Malaysia has managed to win over. However, I do expect Vietnam to matter more and more, as long as its government doesn't do a Winnie and start doing silly things.

 

[Jism]

That's what you get - when the US implies restrictions they figure out a way to become independent.

 

[SOAREVERSOR]

That's what you get - when the US implies restrictions they figure out a way to become independent.

Vietnam is not under restrictions. In fact Vietnam is a trading partner. Even more Vietnam is part of the US Pacific alliance to counter China. The US, Japan, Korea, and more are helping beef up Vietnam's manufacturing capabilities. Companies have been leaving China for other Asian places, especially Vietnam, for some time now. Far from being independent, Vietnam is drawing closer to the US.

So you got this all backwards.

 

[TechLurker]

That's what you get - when the US implies restrictions they figure out a way to become independent.

Vietnam is a close ally with Japan, even going as far as upgrading defense talks and opening a new joint university with Japan plus additional business ventures.

As well, Vietnam is a friendly trading partner with the US, having no animosity with them despite the Vietnam War. In fact, Vietnam has already had a number of Western businesses moved from China to them (notable that some brands used to be "Made in China" are now "Made in Vietnam"). However, Vietnam refuses to join an alliance where the US is the lead, but at the very least, they won't be fighting the US. They have an ancient, legendary grudge with China though, and would only be too happy to keep taking more Western businesses from China.

Yeah, there are a lot of practical concerns that would have to be covered before any semiconductor company would consider building a fab there, but we might end up seeing a gradual building up test and packaging plants first, much like the kind of businesses that Malaysia has managed to win over. However, I do expect Vietnam to matter more and more, as long as its government doesn't do a Winnie and start doing silly things.

I agree; they'll probably go through the walk-before-running phase like others have. I'm just of the opinion that they have the technical skills to handle it with some training.

As for pulling a Winnie, the odds of that are predicted to be low, at least based on how tightly intertwined their high-end economy and technology base is with Japan (IIRC, they have rather favorable trade agreement for things like Japanese-made electronics components). If anything, having an operational fab in their country could allow them to leverage their trade agreements to speed up and stabilize the logistics needed to run and maintain a fab, especially for things like the rare chemicals needed for chip production (of which Japan has a near-monopoly on).

 

[Assimilator]

Vietnam is right next to the PRC, so in terms of distributing semiconductor manufacturing to avoid the worst when WW3 happens, it's not a smart choice. That's on top of the massive investment mentioned that's required to build the supply chain infrastructure required. India's a far better bet, for both of the previous reasons.

And while Vietnam might be within the US's sphere of influence now, it's a one-party socialist state controlled by a three-man junta. Child's play for the PRC to engineer a replacement of those three men, and all of a sudden the nation is another PRC satellite, or even absorbed into the PRC proper. Unfortunately for Vietnam, simple geography means that regardless of their desire to be independent, sooner or later they're going to end up consumed by the dragon.

 

[SOAREVERSOR]

Vietnam is right next to the PRC, so in terms of distributing semiconductor manufacturing to avoid the worst when WW3 happens, it's not a smart choice. That's on top of the massive investment mentioned that's required to build the supply chain infrastructure required. India's a far better bet, for both of the previous reasons.

And while Vietnam might be within the US's sphere of influence now, it's a one-party socialist state controlled by a three-man junta. Child's play for the PRC to engineer a replacement of those three men, and all of a sudden the nation is another PRC satellite, or even absorbed into the PRC proper. Unfortunately for Vietnam, simple geography means that regardless of their desire to be independent, sooner or later they're going to end up consumed by the dragon.

Vietnam and many of the Asian countries act as a block to counter China. Historically China, Japan, and hell Mongolia were the big regional assholes with the Russians jumping in from time to time. Japan is now one of the good guys in this. Other countries the US works with in Asia are one party dictatorships or damn near autocratic. It's not like Singapore or Thailand to start with the more well known ones are different than Vietnam there.

The US and Australia are part of this block as well but generally let the other nations run things.

 

[kapone32]

Vietnam and many of the Asian countries act as a block to counter China. Historically China, Japan, and hell Mongolia were the big regional assholes with the Russians jumping in from time to time. Japan is now one of the good guys in this. Other countries the US works with in Asia are one party dictatorships or damn near autocratic. It's not like Singapore or Thailand to start with the more well known ones are different than Vietnam there.

The US and Australia are part of this block as well but generally let the other nations run things.

For now the US and Australia are happy to give them access to (Some) their Military Contractors and equipment.

Japan is an American partner. Thanks to Honda, Toyota, Sony and others. Japan was once the only country from that region that anything to North America came from. I remember playing with Robots with lights as a kid and Grandizer was my favourite cartoon. Let's also remember Japan announced they will spend up to 10% of their GDP on Military going forward. China has finished 2 Aircraft carriers not including the one they bought from Ukraine and seem to have a replica of the Gerald R Ford Class that finished construction but still should have to do trials.

Korea is special because right now their latest Military equipment is being battle tested in the Ukraine.

 

[Assimilator]

Vietnam and many of the Asian countries act as a block to counter China. Historically China, Japan, and hell Mongolia were the big regional assholes with the Russians jumping in from time to time. Japan is now one of the good guys in this. Other countries the US works with in Asia are one party dictatorships or damn near autocratic. It's not like Singapore or Thailand to start with the more well known ones are different than Vietnam there.

The US and Australia are part of this block as well but generally let the other nations run things.

The difference is that Japan, Singapore, South Korea, and Taiwan don't share a land border with the PRC; Vietnam does. So regardless of what its leadership may want, and regardless of what its partners may want, there is the simple geopolitical reality that Vietnam is always going to be one of the riskier bets as a partner in SE Asia. And there's zero chance that the PRC is ever going to allow Vietnam to fortify their border as a preventative measure to deter potential aggression, so there's sadly zero possibility for Vietnam to ever de-risk itself.