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| Strong diplomatic relations will be the key to opening up opportunities for semiconductor businesses in Vietnam, helping them participate deeply in the regional and global semiconductor supply chain. (Source: iStock) |
The semiconductor industry is currently one of the most important strategic industries in the world. Sharing his views at the Conference on Economic Diplomacy for National Development, within the framework of the recent 32nd Diplomatic Conference, Deputy General Director of Viettel Military Industry and Telecommunications Group Dao Xuan Vu emphasized the timing of Vietnam's deep participation in the global semiconductor supply chain.
The semiconductor industry is a multinational industry, and no country or company can be 100% self-sufficient or fully control the industry's value chain. In the context of the global semiconductor chip supply chain being disrupted during the Covid-19 pandemic, the US-China trade war, or the US and some countries trying to restructure the semiconductor supply chain, this is the best opportunity for Vietnam.
Great potential, big challenges
According to statistics, the global semiconductor industry reached 600 billion USD in 2022, forecast to touch and exceed 1,000 billion USD in 2030 with an average annual growth rate of double digits.
The semiconductor industry is considered one of the backbone and core industries for economic development because it is the foundation industry for the development of other industries such as electricity - electronics, automation, telecommunications and information technology... Currently, many countries in the world are making efforts to build the semiconductor industry to improve the autonomy of the national industry.
According to the assessment of experts, consulting organizations, the US Semiconductor Industry Association and based on the results of research and analysis of the Ministry of Foreign Affairs when working with foreign experts, Vietnam is a country with great potential to participate in and develop the semiconductor industry due to its stable political system and favorable geographical location; the Government is particularly interested in promoting the development of this field. Relevant ministries and sectors are implementing strategies, policies and action plans to develop the semiconductor industry.
In particular, the Prime Minister is very interested in and often mentions cooperation in semiconductor development in high-level working sessions with countries with developed semiconductor industries such as the US, Japan, etc.
In addition, Vietnam has a young and potential workforce with reasonable labor costs, with a good foundation in engineering and technology suitable for the semiconductor industry. Currently, Vietnam has more than 8,000 people working in the semiconductor industry, including 5,000 engineers for the design stage, and 3,000 engineers and workers for the chip packaging and testing stage.
Vietnam is also considered a country with many highly qualified scientists, experts, and engineers in the semiconductor field living and working abroad.
In fact, with the semiconductor ecosystem gradually taking shape, some of the world's largest semiconductor companies such as Intel, Samsung, Amkor... have invested in Vietnam. To date, more than 40 foreign semiconductor companies have established branches and subsidiaries in Vietnam. Some domestic enterprises with large resources such as Viettel and FPT have begun to participate in chip design.
Regarding human resources, many universities in Vietnam such as Hanoi National University, Ho Chi Minh City National University, Hanoi University of Science and Technology have the ability to train human resources to develop the semiconductor industry.
Another potential that is also highly appreciated is Vietnam's rare earth reserves, reaching about 22 million tons, second in the world, after China. Rare earth is one of the strategic raw materials for semiconductor production, necessary for many high-tech industries.
However, according to practical experience, Mr. Dao Xuan Vu said that Vietnam is considered to have a lot of potential to develop the semiconductor industry, but to successfully participate in the global supply chain, it faces many challenges and obstacles.
The first obstacle that can be mentioned is that semiconductor technology is a limited industry access, from design support software to machinery, materials, as well as manufacturing processes.
This is also a field that requires high-quality and very specific human resources. In design, it also requires knowledge of related industries. In production, it requires operating engineers to have many years of experience. In fact, although Vietnam currently has 5,000 design engineers, they are mainly only allowed to perform design inspection and testing in branches and offices of foreign companies.
Meanwhile, the capital for designing, investing and operating a manufacturing plant is also a huge challenge. For example, the estimated cost for investing in a 28nm semiconductor chip manufacturing plant is about 10 billion USD, which needs to be depreciated in a short time, which requires a large enough market and output to offset the very high investment and operating costs. Meanwhile, the output market depends mainly on a few large chip designers and electronic equipment manufacturers.
In addition, the development of this high-tech sector also requires a complete ecosystem, synchronized with the manufacturing plant. A semiconductor chip factory needs more than 200 types of equipment, nearly 1,000 types of auxiliary materials and supplies, but currently the Vietnamese semiconductor ecosystem is not complete, and there are no domestic suppliers for semiconductor chip factories.
Another huge challenge is that the infrastructure for semiconductor manufacturing plants is not yet secure, requiring a lot of electricity and water for production.
The key to opening opportunities for Vietnamese businesses
Appreciating the fact that the Ministry of Foreign Affairs has proactively conducted research on the semiconductor market in other countries and supported domestic enterprises in connecting with the US Semiconductor Industry Association and US and Japanese semiconductor corporations, a representative of Viettel Group said, "The information we have accessed has helped us determine a suitable strategy to participate in the semiconductor industry."
Specifically, for example, the Ministry of Foreign Affairs has supported businesses to access many valuable sources of information from the US; as well as from the Ministry of Foreign Affairs' independent research reports on the development of the semiconductor industry in countries such as the US, Japan or the Prime Minister's Dialogue with 10 leading Japanese semiconductor enterprises on December 16 also helped expand semiconductor cooperation opportunities for Vietnamese businesses...
From there, the Deputy General Director of Viettel Group has high expectations for the connecting role of the Ministry of Foreign Affairs in supporting and accompanying Vietnamese enterprises to participate in the regional and global semiconductor supply chain.
“To overcome the above-mentioned series of challenges, in addition to the determination and efforts of each enterprise, it is necessary to have the guidance and support of the government, ministries, especially the Foreign Affairs sector in the initial stage to connect, as well as concretize cooperation opportunities, connect and mobilize international resources, as well as establish cooperative relationships in the semiconductor field from the government level to create conditions and corridors for business-level cooperation”. Mr. Dao Xuan Vu “ordered” very specifically:
Firstly, promote with companies to build semiconductor chip factories in Vietnam, thereby gradually developing the domestic semiconductor ecosystem as a premise for domestic semiconductor companies to have market opportunities to determine appropriate investment and development roadmap.
Second, continue to build working programs with governments and large semiconductor enterprises to learn about specific policy mechanisms needed to serve the development of a policy mechanism for the semiconductor industry in Vietnam.
Third, the output market for the semiconductor industry depends heavily on large electronics manufacturing companies and semiconductor chip design companies, so it is recommended that the Ministry of Foreign Affairs, the Ministry of Planning and Investment, and other relevant ministries and sectors develop a trade promotion plan and seek output markets for the Vietnamese semiconductor industry.
Finally, promote connection and cooperation in research and production with foreign semiconductor businesses and experts.
“We see that in the semiconductor sector, strong diplomatic relations will be the key to opening up opportunities for semiconductor businesses in Vietnam, contributing to Vietnam's deep participation in the regional and global semiconductor supply chain,” Mr. Dao Xuan Vu affirmed.
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