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Home World News Asia

Vietnam’s Strategic Ascent Up the Global Chip Supply Chain – The Diplomat

August 5, 2025
in Asia
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Vietnam’s Strategic Ascent Up the Global Chip Supply Chain
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In March of this year, the Vietnamese government officially approved the country’s first wafer fabrication plant, with a total investment of 12,800 billion VND ($500 million). Scheduled for completion before 2030, the project marks Vietnam’s first serious step into the high-value, technically demanding world of chip manufacturing. For years, Vietnam has been an emerging participant in the semiconductor supply chain, though its involvement so far remains mostly concentrated in lower rungs of the supply chain, such as packaging and testing.

Although the factory may initially focus on less advanced chips, it represents a move into the more complex and strategic phase of semiconductor fabrication in support of Vietnam’s long-term vision to become a global semiconductor hub by 2050. This transition comes at a moment when semiconductors have become central to global power. In 2024 alone, the global chip market was valued at over $627 billion, according to the World Semiconductor Trade Statistics. Chips today are central to military capability, economic competitiveness, and technological sovereignty.

What is Vietnam’s chance of evolving into a serious player in this new industry? Vietnam is taking concrete steps to establish a credible legal and institutional foundation for its semiconductor ambitions. A key milestone came on June 27, when the National Assembly passed the Law on Science, Technology, and Innovation. Scheduled to take effect on October 1, this law introduces Vietnam’s first comprehensive statutory framework for managing and promoting innovation, including provisions that directly support the semiconductor sector.

In 2025 alone, the Ministry of Science and Technology led the drafting of nine major laws related to science, technology, innovation, and digital transformation. This is an unprecedented number, considering that in the previous five-year National Assembly terms, passing even one or two such laws was considered significant.

The Law on Science, Technology, and Innovation sets three priorities for the government: building and expanding national research infrastructure; creating a legal environment that encourages risk-taking and innovation; and introducing flexible funding mechanisms and protections to support researchers and institutions.

Complementing these priorities is Vietnam’s continued effort to strengthen intellectual property (IP) protections, particularly in areas such as chip design, integrated circuit layouts, and trade secrets. Without enforceable IP laws, global firms are unlikely to share their most sensitive technologies or engage in co-development partnerships. To elevate Vietnam’s role in the global semiconductor supply chain, the government has also included a range of targeted investment incentives such as preferential tax policies, ESG-compliant industrial zones, streamlined land access, and prioritized R&D. In parallel, the government is also investing in human capital. Through partnerships with firms like Synopsys and Cadence, chip design training programs are being introduced to build a skilled domestic workforce.

The government’s semiconductor drive also involves significant improvements to Vietnam’s infrastructure. Unlike general manufacturing, semiconductor production requires ultra-clean environments, uninterrupted electricity, sophisticated temperature and humidity control systems, and access to pure water. Developers such as Frasers Property, VSIP, and DEEP C are already building fab-ready industrial parks that meet global ESG and LEED standards. In Bình Duong, for example, sustainable industrial zones are emerging to attract and support high-tech investment.

To reinforce this momentum, Vietnam is also pursuing internal structural reforms aimed at aligning governance with industrial needs. One such initiative in northern Vietnam is the coordinated development of provinces like Bac Ninh and Bac Giang into a high-tech economic corridor. This strategy aims to attract semiconductor supply chain investment through integrated industrial zones, infrastructure upgrades, and targeted incentives for global tech firms. At the center of this effort is Bac Ninh, home to major investments from Samsung and Amkor, which is positioning itself as a potential “Silicon Valley of the North” by leveraging its proximity to Hanoi, well-established industrial infrastructure, and a rapidly growing ecosystem of electronics and chip-related industries.

But moving up the value chain also requires strong partnerships. Vietnam has deliberately chosen not to align with a single power bloc but instead pursues a multi-directional strategy, seeking collaboration with a wide range of technology partners. The United States is playing a significant role, supporting Vietnam through policy coordination and workforce development programs. Japan is contributing expertise in smart manufacturing and semiconductor tooling, while South Korea continues to expand its chip ecosystem in Vietnam, including through Samsung’s growing R&D operations in Hanoi.

Amid all this progress, Vietnam remains conscious of the geopolitical terrain. As tensions escalate between the U.S. and China, the country has attempted to strike a balance, benefiting from American capital and training while keeping stable relations with China. This balanced approach has earned attention abroad. Vietnam is increasingly recognized as one of the key emerging beneficiaries of the “China+1” diversification strategy, as companies seek to build more resilient and geographically balanced supply chains.

Yet challenges remain, the most urgent of which is talent. While the government has set a goal of training 50,000 semiconductor engineers by 2030, the current talent pool remains limited. Most universities do not yet offer deep technical programs in chip design, process engineering, or fab management. Vietnam’s current partnerships with Synopsys and Cadence focus on foundational chip design training, though this is still limited in scope and not yet sufficient for competing in the more advanced segments of the global semiconductor industry. IP enforcement, too, remains uneven and many companies still perceive risks around technology leakage. The necessary infrastructure will also take considerable time to develop, given the scale of the requirements.

While challenges remain, particularly in areas such as energy supply, skilled labor, and long-term policy consistency, Vietnam has, in just the first half of 2025, demonstrated that its semiconductor ambitions are more than aspirational. The government has moved decisively from planning to implementation, enacting new laws, strengthening intellectual property protections, and launching targeted investment incentives. These efforts signal a broader shift: Vietnam is no longer just a recipient of technology or capital, but is attempting to position itself as a partner committed to contributing and aligning with international standards. For investors and global collaborators, it is sending the message that Vietnam is not only ready to engage today, but is also laying the strategic foundation to become a key global semiconductor hub by 2050.

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