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| Vietnam is truly becoming the “center” of attention for high-tech corporations in general and the semiconductor industry in particular. (Source: Investment Newspaper) |
US and Europe ban, can Vietnam "squeeze in"?
Ten days ago, US President Joe Biden signed an executive order to restrict domestic companies from investing in high-tech sectors such as semiconductors, microelectronics, quantum information technology, artificial intelligence, etc. in China. This executive order requires companies to report to the US government on new investment plans in these sectors in China.
Following the US, the European Commission (EC) and the UK are also studying similar moves. They are analyzing the US moves and considering whether to restrict their businesses from investing in certain technology sectors in China.
The actions of the US and Europe show that the US-China trade tension is increasing. And certainly, there will be certain impacts on global investment flows, as well as the economy and trade of the US, Europe and China.
The question is, does this present an opportunity for Vietnam?
“It is possible if American and European businesses consider shifting their investment and production from China to a third country, including Vietnam,” said Professor Nguyen Mai, Chairman of the Association of Foreign Investment Enterprises.
In fact, Vietnam - after becoming a destination for the world's leading electronics corporations, is gradually attracting many projects in the semiconductor field. Among them, Intel is the first name mentioned, with a project of nearly 1.5 billion USD in Ho Chi Minh City. Samsung is expected to also produce semiconductor components at the Samsung Electro-Mechanics Thai Nguyen factory by the end of this year. Meanwhile, Amkor will put its 1.6 billion USD factory in Bac Ninh into operation by the end of this year.
Recently, a number of large investors in this field have come to Vietnam and committed to investing. One of them is China's Victory Gaint Technology Group, which wants to invest in a 400 million USD project in Bac Ninh. Meanwhile, Runergy New Energy Science and Technology Group has been granted an investment registration certificate to build a factory to produce electronic and semiconductor components, such as silicon bars, semiconductor wafers, etc. in Hoang Mai I Industrial Park (Nghe An). The project has a total investment capital of 293 million USD, expected to be operational from mid-2025.
In mid-July 2023, during her first visit to Vietnam, US Treasury Secretary Janet Yellen emphasized that over the past decade, Vietnam has emerged as an important node in the global semiconductor supply chain. She also shared her desire to strengthen cooperation with Vietnam in developing supply chains, including in the semiconductor sector.
“Our top priority is to build resilience in the U.S. semiconductor supply chain,” Secretary Janet Yellen said, adding that the U.S. is working with partner countries to increase investment, including a new $500 million fund for international semiconductor and telecommunications projects under the CHIPS Act.
Semiconductor chip manufacturing projects that US businesses have invested in Vietnam were also mentioned by Secretary Janet Yellen, including Intel's project in Ho Chi Minh City, Amkor's in Bac Ninh and Onsemi's in Dong Nai...
Ready to welcome the "golden" opportunity
Vietnam is truly becoming the “center” of attention for high-tech corporations in general and the semiconductor industry in particular. The Vietnamese government is also very interested in attracting investment in this field. The Ministry of Planning and Investment is being assigned by the government to research and develop a separate project on attracting investment and developing the semiconductor industry.
It is easy to understand why the Vietnamese Government made such a move, because the global chip market size reached more than 600 billion USD in 2022 and is forecast to increase to 1,400 billion USD in 2029. Many countries want to get into the supply chain in the semiconductor industry, not just Vietnam.
Vietnam has many advantages, not only because it is gathering many large projects in the high-tech field, including projects in the semiconductor field, but also because it owns a very large reserve of rare earths (about 22 million tons), even ranked second in the world, only after China. Rare earths are a strategic raw material for the production of semiconductors, as well as many other components and products of the 4.0 industrial revolution. The recent tense global trade war is more or less related to rare earths and semiconductor production.
One positive news is that, after the recent visit to Vietnam by South Korean President Yoon Suk Yeol, the two sides reached agreements on cooperation in establishing a Vietnam-Korea supply chain center for rare earths and core minerals.
According to Mr. Do Cao Bao, member of the Board of Directors of FPT Corporation, despite having large reserves, in 2022, Vietnam only exported 4,300 tons of rare earth, worth about 200 million USD - a very small number. Therefore, if the cooperation agreement with Korea is implemented, it will bring great opportunities for Vietnam.
“Vietnam is gradually becoming the new center of rare earth supply in the world. South Korea’s desire to establish a Vietnam-Korea supply chain center for rare earths and core minerals is to help South Korea and Western countries reduce their dependence on China in the global rare earth supply chain,” said Mr. Do Cao Bao.
Exploiting rare earths will be one of the “golden” opportunities for Vietnam to attract more investment from foreign corporations, including Europe and the US, in the high-tech sector in general and the semiconductor industry in particular. However, according to Professor, Dr. Nguyen Mai, although the opportunity is there, the important thing is how prepared and ready will Vietnam be?
Recent information shows that Vietnam has missed the opportunity to welcome a billion-dollar semiconductor project from a technology giant. The reason is not only the issue of human resources, but also because of Vietnam's support policies related to global minimum tax.
“If there is no policy soon that is consistent with international practices and competitive enough regarding the implementation of global minimum tax, Vietnam will find it difficult to attract investment in high-tech and large-scale projects,” said Professor Nguyen Mai, PhD, and pointed out issues that need to be improved, such as intellectual property, policy transparency, “petty corruption,” or the cumbersomeness of investment procedures, etc.
Minister of Planning and Investment Nguyen Chi Dung has also emphasized this many times!
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