The global semiconductor industry took 66 years to reach $500 billion in value but only needs nine more years to double to $1 trillion. Despite this exponential growth, Vietnam's chip sector remains dominated by foreign direct investment (FDI), with little domestic ownership.

The semiconductor industry’s pivotal turning point

At the seminar “Current Situation, Challenges, and Prospects of Vietnam’s Semiconductor Industry” held on November 29 in Hanoi, Nguyen Thanh Yen, CEO of CoAsia SEMI, shared striking statistics. In 2021, the world sold over 1 trillion chips, averaging 120 chips per person annually.

“It’s hard to find any device today that doesn’t contain a chip,” Yen emphasized, highlighting the pervasiveness of microchips in modern life.

He pointed to a chart by Dr. Nguyen Thi Bich Yen, a renowned Vietnamese-American in the semiconductor field, showing that while the global semiconductor market took 66 years to reach $500 billion in 2021, it will only take nine more years to surge to $1 trillion by 2030.

This growth, Yen noted, was initially driven by advancements in computers, smartphones, and 4G/5G technology. Future milestones like autonomous vehicles, high-performance computing, AI, and 6G will propel the industry to unprecedented heights.

The production of an iPhone chip exemplifies the globalization of the semiconductor supply chain. Chips require contributions from countries such as the Netherlands (equipment), the UK (intellectual property), the US (design), and Taiwan (China) (manufacturing). Meanwhile, raw materials come from China and Japan, and packaging and assembly take place in Malaysia and China.

This intricate process underscores Asia’s dominant role in semiconductor manufacturing, with the region poised to shape the industry's future.

Vietnam’s window of opportunity

Discussing Vietnam’s semiconductor prospects, Yen highlighted research by Dr. Nguyen Thi Bich Yen identifying global challenges over the next three years: a shortage of skilled talent, supply chain disruptions, rising R&D costs, cybersecurity risks, and limited production capacity.

“While the world faces a talent shortage, Vietnam has an abundant, motivated, and young workforce,” Yen said, noting the potential of the country’s 500,000 annual university applicants and strong labor export programs. “But this opportunity will vanish if we don’t act within the next three years.”

Vietnam currently has about 50 chip design companies, seven packaging and testing facilities, and no manufacturing plants. The sector generates nearly $20 billion in annual revenue and employs 26,000 engineers. However, significant gaps remain to meet the government’s semiconductor strategy for 2030, which aims for 100 chip design companies, one manufacturing plant, 10 packaging facilities, and 50,000 skilled workers.

Key challenges for Vietnam

 
Despite its potential, Vietnam’s semiconductor industry faces three significant challenges:

Incomplete Ecosystem: Vietnam lacks a complete ecosystem encompassing design, manufacturing, testing, and packaging. Yen emphasized that the country’s burgeoning consumer electronics market is dominated by foreign players, leaving domestic firms with minimal ownership.

Policy Implementation: Although Vietnam’s semiconductor policies are well-crafted, execution often falters. Yen cited delays in customs clearance for imported electronic samples as an example of bureaucratic inefficiency.

Lack of Ownership: All 50 chip design companies and seven packaging facilities in Vietnam are foreign-owned. “FDI companies can leave whenever they want,” Yen warned, contrasting Vietnam’s reliance on foreign firms with countries like South Korea and Taiwan, which have fostered strong domestic players like Samsung and TSMC.

Vietnam must decide whether to follow the FDI-driven models of Malaysia and Indonesia or build its own semiconductor champions like its more advanced neighbors.

The path ahead

Vietnam recently unveiled its Semiconductor Industry Development Strategy, setting ambitious goals for 2030, 2040, and 2050:

By 2030: 100 chip design companies, one manufacturing plant, 10 packaging facilities, and 50,000 workers.
By 2040: 200 chip design companies, two manufacturing plants, 15 packaging facilities, and 100,000 workers.
By 2050: 300 chip design companies, three manufacturing plants, 20 packaging facilities, and a robust, self-sufficient ecosystem.

Vietnam’s success will depend on its ability to overcome these challenges and seize the fleeting opportunities within the next three years.

Binh Minh