Vietnam aspires first semiconductor facility; U.S. warns of associated high expenses

According to a report from Reuters, Vietnam, a prominent electronics manufacturing hub in Southeast Asia, already hosts Intel's largest semiconductor packaging and testing facility globally and houses various chip-design software firms. It is actively formulating strategies to attract additional semiconductor investments, including those from foundries that specialize in chip production.

Over the past few weeks, discussions have been held with around six U.S. chip firms, including fab operators, as confirmed by Vu Tu Thanh, who serves as the head of the Vietnam office of the US-ASEAN Business Council. He refrained from revealing the companies' names, emphasizing that these discussions remain in their preliminary stages.

An executive in the chip industry, who preferred to remain anonymous due to media restrictions, mentioned that conversations with potential investors have involved U.S. contract manufacturer GlobalFoundries and Taiwan's PSMC.

The primary objective is to establish Vietnam's inaugural fab, likely focusing on less advanced chips utilized in automotive or telecommunications applications, the executive added.

These discussions come in the wake of a significant enhancement in formal ties between Vietnam and the U.S. in September when President Joe Biden paid a visit to Hanoi. The White House described Vietnam as a potential "critical player" in global semiconductor supply chains.

GlobalFoundries did attend a restricted business summit during Biden's visit following a personal invitation from the president. However, according to an insider, the company has not shown immediate interest in investing in Vietnam.

"We do not comment on market rumors," a GlobalFoundries spokesperson said. However, Taiwan’s PSMC did not reply to a request for comment.

According to industry experts, the current meetings are primarily exploratory in nature, serving to gauge interest and deliberate on potential incentives and subsidies. These discussions encompass aspects like power supply, infrastructure, and the availability of a skilled workforce.

The Vietnamese government has expressed its ambition to establish its first semiconductor fabrication plant by the close of this decade. Moreover, on Monday, they announced that chip companies would enjoy "the most favorable incentives accessible in Vietnam."

Additionally, there is a possibility of the Vietnamese government extending support to local companies, such as the state-owned tech firm Viettel, in their endeavors to construct fabs using imported equipment. Hung Nguyen, the senior program manager specializing in supply chains at the University of Vietnam in Hanoi, made this observation when speaking with Reuters.

As of now, Viettel has not responded to requests for comments.

Robert Li, who holds the position of Vice President at Synopsys, a prominent U.S. chip design company with a presence in Vietnam, advised the government to exercise caution and carefully evaluate the provision of subsidies for fab construction.