Vietnam is securing much greater attention as an investment destination for global semiconductor companies while the US has been making non-stop moves to minimize the chipmaking industry’s exposure to China-linked risks.
US-headquartered Amkor Technology, a world-leading semiconductor company, has so far invested US$1.6 billion in Bac Ninh province bordering Hanoi. The chipmaker is preparing to launch its Vietnam factory by the end of this year, with trial operations set to start in October as construction is due to be completed in September.
The state-of-the-art facility is among the biggest operated by Amkor globally as it will cover around 23 hectares in Yen Phong II-C Industrial Park.
Intel runs a US$1.5 billion facility in Ho Chi Minh City, Vietnam’s southern economic hub for assembling, packaging and testing chips. Located in Saigon High Tech Park, the chip assembly and test factory is Intel’s largest production base accounting for around 70% of its global production.
Intel has had plans to expand it (but has not publicized its new capital investment) as firms in the sector push to diversify their supply chains and reduce reliance on China and Taiwan.
Senior executives from Amkor, Intel, Marvell, Google and Boeing are due to attend a business meeting on September 11 in Hanoi as part of US President Joe Biden two-day visit to Vietnam, which started September 10. The major business event, which aims to boost bilateral ties, is expected to highlight US plans to enhance Vietnam’s new role in the chip sector.
The Southeast Asian nation, which has become a global production hub, has different advantages like stable politics, low labour costs, abundant human resources, and geological advantages of high accessibility to high-tech supply chains in Asia.
To support semiconductor supply chains globally, the Biden administration is making US$100 million a year for five years available under the Chips and Science Act, which the US president signed into law in August 2022.
Vietnam has risen to become the third-largest chip exporter to the US, behind Malaysia and Taiwan, according to the Vietnamese Ministry of Information and Communications. In February 2023, its semiconductor exports to the US reached US$562.5 million, up from US$321.7 million in February 2022.
World-class design
US firm Marvell Technology announced in May that it planned to establish a world-class design centre, located in Ho Chi Minh City, that will house advanced semiconductor engineering and be a top technology workplace for those looking to upgrade their skills and careers.
The company also intends to invest in the development of critical technical skills in Vietnam through a newly formed scholarship programme to meet the talent requirements of its new design centre. The programme will support talented students pursuing degrees in engineering and computer science at selected universities in Vietnam.
The Marvell scholarship programme aims to strengthen critical engineering skills in Vietnam, expand female workforce representation at all levels and responsibilities, and improve diversity by recruiting from low-income regions.
In early June, South Korean firm Hanmi Semiconductor opened a global branch office, Hanmi Vietnam, in Bac Ninh - a start-up new production base for global semiconductor companies, including Amkor. DS Kwak, the company’s vice-chairman, notes: “We established our office to actively target the increasingly important Vietnamese market.”
Amkor Technology Vietnam CEO Kim Sung Hun, while speaking to Bac Ninh’s Communist party chief Nguyen Anh Tuan during his working trip in May to the Amkor Vietnam plant site, says that Amkor selected the province for the mammoth project thanks to Bac Ninh's favourable investment environment, robust infrastructure, and its synchronized utility networks encompassing electricity, water and communications.
The province, Kim shares, offers the necessary conditions to nurture talent and a highly skilled technical workforce, with positive support from the provincial leadership and local authorities.
Korean firms invest big
Samsung, which is the single largest foreign investor in Vietnam to date, has invested US$20 billion in the country. Last year, Samsung Electronics announced a total investment plan of US$2.27 billion to expand its next-generation semiconductor substrate business.
In Bac Ninh, the Korean giant has two companies – Samsung Electronics Vietnam and Samsung Display Vietnam. It also operates Samsung Electronics Vietnam Thai Nguyen in Thai Nguyen province, also in the north and Samsung HCMC CE Complex in Ho Chi Minh City. The four Vietnam subsidiaries reported after-tax profits of 6,055.9 billion won (US$4.67 billion) in 2022, up 16.28% compared with 2021.
Vietnam, according to a recent report by the Bank of Korea, is quickly becoming a significant market for South Korean semiconductor makers, who have been grappling with lacklustre demand in China. As tensions between the US and China accelerate, the bank has emphasized the importance of diversifying export markets for industry giants like Samsung Electronics and SK Hynix.
In June, SKC, a South Korean manufacturer of advanced materials, signed a preliminary agreement with Vietnam’s Hai Phong City to explore potential investment in advanced materials for semiconductors, secondary batteries and other green sectors. SKC says it will consider ways to invest in Hai Phong, a major port city and logistics hub in the north, as a site for the Korean firm’s expansion into high-tech materials.
In Bac Giang province near Bac Ninh, South Korea’s Hana Micron, a printed circuit board maker, plans to sharply increase the number of its Vietnamese factory employees, currently estimated to be between 300 and 400, to 3,000 by 2025.
Hana Micron is also continuously increasing its technology development engineers and production personnel at its Vietnamese plant, a major production base for Hana Micron’s global outsourced semiconductor assembly and test operations. Its main customers are Samsung Electronics and SK Hynix, which is part of SK Group, the second largest South Korean chaebol behind Samsung Group.
Avoiding China-US tech war
In August, the US-based electronic design automation (EDA) company Synopsys started to expand its investments in Vietnam, announcing its commitment to training Vietnamese chip designers in Ho Chi Minh City in partnership with Saigon High Tech Park (SHTP). Two months later, Synopsys and SHTP launched the SHTP Chip Design Centre at the park.
As part of the partnership, Synopsys has donated software licences worth dozens of millions of US dollars to the design centre’s lab through the Synopsys University Software Programme, an initiative that aims to inspire and foster the next generation of technologists and innovators.
The programme provides academic and research institutions with exclusive membership to Synopsys’ EDA tools and technology needed to prepare highly-skilled graduates to become professionals.
In December, Synopsys and SHTP started their first co-organized training course on chip design training for universities in Ho Chi Minh City.
Synopsys says it is re-directing its operations to avoid a China-US tech war by moving part of its engineer training venture to Vietnam.
