Fifteen semiconductor companies have signaled their intent to invest $8 billion in Vietnam, subject to the nation’s dedication to renewable energy. Jose Fernandez, the undersecretary for economic growth, energy, and the environment at the State Department, noted that these companies have responsibilities to their shareholders, making their investment contingent upon the establishment of a renewable energy framework in the country. “We’re seeing a lot of interest from the industry to expand in this area,” he told reporters after meeting with Vietnamese government officials and business leaders.
Southeast Asian nations have a long history of manufacturing electronics. It is already home to Intel’s most extensive packaging and testing plant worldwide and software chip design centers for significant players like Synopsys and Marvell. However, the country is still a relatively low-cost manufacturer compared to its global peers, and it needs to improve its workforce capabilities if it wants to climb up the value chain in semiconductor manufacturing and design.
Vietnam has a large pool of engineering talent to draw from, with over 40 percent of college and university graduates majoring in science and engineering. It also has a growing number of technical universities. But the country needs more engineers, which could be a hurdle for its ambition to become a global chipmaking hub. The need for more engineers is driving up labor costs for local producers and creating a barrier to entry for foreign investors.
But a long-term solution is possible: Vietnamese companies must be trained to produce more engineers. It’s a costly endeavor, but it is necessary to secure long-term competitive advantages. Until then, most chipmakers are focusing on the less capital-intensive operations of chip packaging and testing rather than fabs.
Vietnam’s infrastructure and transportation systems are well-developed, making it an attractive location for logistics companies. The country’s ports are expanding, its highway system is improving, and its airports are being modernized. This, coupled with high export growth and a shift of supply chains away from China, is fueling substantial demand for logistics services.
Vietnam’s economy has been expanding at an annual pace of around 6% over the past decade. Its GDP is expected to top US$1.4 trillion this year, a record high. With an increasingly global outlook, Vietnam will likely continue to attract PE investments in the coming years. However, the country must address challenges such as a backward infrastructure, weak intellectual property rights enforcement, and complex regulations. The good news is that M&A processes are becoming more structured and professional, with the era of handshake deals gradually ending. Gigi Onag is senior editor, APAC at Light Reading. She has been a technology journalist for over 15 years, covering enterprise IT across the Asia Pacific. She started her career with regional IT publications under CMP Asia (now Informa), including Asia Computer Weekly, Intelligent Enterprise Asia, and Network Computing Asia. She has also written for sister publications Computerworld Hong Kong and FutureIoT.