Vietnam is benefiting from the US-led semiconductor war against China and is becoming a major new player in the global semiconductor industry.
Vietnam's highly educated and motivated engineers working for relatively low wages have attracted a range of semiconductor packaging and design companies from the US, Germany, Japan, South Korea and Taiwan.
With a technology-driven industrial development policy, Vietnam is following in the footsteps of Malaysia, which is currently the world's sixth-largest semiconductor exporter and accounts for 13 percent of the global assembly, testing and packaging industry, according to think tank ISIS Malaysia.
This will no doubt please the Biden administration, which has promoted Vietnam as an alternative to China under the U.S.-Vietnam Comprehensive Strategic Partnership, but the trend will likely happen regardless.
According to market research institutes' calculations, the annual salary of an engineer in Vietnam is about $8,000, about half that of an engineer in Malaysia, $34,000 in South Korea, $46,000 in Taiwan, $50,000 in Japan and $68,000 in Singapore.
According to semiconductor industry sources, the annual salary for a design engineer with less than three years of experience is $10,000-$15,000 in Vietnam, compared with $65,000-$70,000 in the United States.
Even taking into account data imperfections and fluctuating exchange rates, salaries in Vietnam and Malaysia are well below the “high-paying union jobs” touted by the Biden administration, and the gap is unlikely to close anytime soon.
That's why Intel's largest integrated circuit (IC) assembly, packaging and testing facility is in Vietnam and its largest advanced 3D packaging facility is in Malaysia.
Infineon, Germany's largest semiconductor manufacturer, has set up a product development team in its new Hanoi office, which opened in June last year.
At the time, CS Chua, CEO of Infineon Technologies Asia Pacific, told Vietnam Investment Review: “With a fast-growing, young population of nearly 100 million people, Vietnam has rapidly transformed into a coveted destination for multinational companies looking to tap into a talented pool of tech talent.”
Hartmut Hiller, a senior executive at Infineon, added: “The new development center in Hanoi will enable Infineon Technologies to meet the growing demand for functional testing and customized circuit design, especially for our industry-leading system-on-chip (SoC) solutions.”
Earlier this month, Infineon began producing silicon carbide power semiconductors at a new factory in Malaysia with an experienced workforce and supporting infrastructure that Vietnam is currently building. Ensuring a stable supply of electricity and water is an ongoing challenge as Vietnam's semiconductor industry expands.
Renesas Electronics, Japan's largest comprehensive semiconductor device manufacturer, has had a presence in Vietnam since 2004 when it established a design team in Ho Chi Minh City. Renesas Design Vietnam is now the company's largest design center outside of Japan. Renesas has also set up semiconductor design courses at Vietnamese universities.
South Korean IC design firm BOS Semiconductors, which has a partnership with Hyundai Motor, and CoAsia, which has a partnership with Samsung, both have research and development centers in Vietnam.
Samsung Electro-Mechanics, Hanamicron Vina and Hanmi Semiconductor manufacture packaging substrates, printed circuit boards and semiconductor packaging equipment, respectively, in Vietnam.
Taiwanese semiconductor design companies GUC and Faraday Technology have design centers in Vietnam, and Alchip Technologies is also planning to set up one there. GUC and Alchip are both subsidiaries of Taiwan's global semiconductor giant TSMC.
Taiwanese investment bank FCC Partners is working with Vietnam's FPT Software to establish the Vietnam Semiconductor Development Fund.
Vietnam also has its own semiconductor design companies, including FPT Semiconductor and VN Chip, and is poised for further growth with support from universities, start-up incubators, large corporations and financial institutions, high-tech industrial parks, tax incentives and subsidies.
The Vietnamese government has set a goal of training 50,000 semiconductor engineers by 2030. This is roughly 10 times the number of engineers the country currently has, according to Truong Viet Anh, an associate professor at Hanoi University of Science and Technology, reported VnEconomy.
However, the largest foreign companies in Vietnam's semiconductor industry are overwhelmingly American. Besides Intel, other US companies operating in Vietnam include Microchip, Marvell, Qualcomm, Synopsys, Cadence, Savarti, Uniqify and Amcor.
Marvell, which specializes in data infrastructure semiconductor solutions, expects Vietnam to become its third-largest design center after the United States and India.
Microchip manufactures microcontroller, mixed-signal and analog devices and develops chips for Vietnam's automotive, industrial, aerospace and defense, communications, computing and consumer markets.
Qualcomm entered Vietnam in 2003 and has since been working with network operators and the government to introduce mobile communications technologies from 2G to 5G. With the support of the Ministry of Science and Technology, the company runs the annual Qualcomm Vietnam Innovation Challenge for start-ups.
Synopsys, a global leading electronic design automation company, has more than 500 employees across multiple locations in Vietnam. In 2023, the company signed MOUs with the Da Nang People's Committee to support the Da Nang IC Design Incubation Center, the Vietnam National Innovation Center (NIC) to develop IC design expertise, and the Department of Information and Communications Technology Industry to help establish a semiconductor research institute.
NIC also announced a partnership with Synopsys competitor Cadence last year to accelerate IC design innovation in Vietnam. Under the deal, Cadence design tools will be provided to Vietnamese universities, training centers and start-ups. NIC has also signed a contract with Arizona State University to develop semiconductor-related training and research programs.
US semiconductor design companies Sabalti and Uniqifi have set up research and development centers in Vietnam, with Sabalti specializing in analog and mixed-signal devices and Uniqifi specializing in system-on-chip (SoC) design.
Amkor, the world's second-largest semiconductor assembly and test outsourcing services (OSAT) provider, opened its first factory in Vietnam in October 2023. Located in Yen Phong Industrial Park, Bac Ninh Province, near Hanoi, the factory is “state-of-the-art,” according to Amkor CEO Gyel Rutten. “It's a secure and reliable supply chain that meets the needs of our customers in communications, automotive, high-performance computing and other key industries,” he added.
The U.S. Department of Commerce kept secure supply chains in mind by signing a non-binding preliminary memorandum of understanding with Amcor on July 26 of this year to provide up to $400 million in direct funding, loans and tax credits under the CHIPS Act to help the company build its first OSAT plant in the U.S. The $2 billion investment in advanced packaging capabilities is expected to create approximately 2,000 jobs in Arizona.
“So companies behind some of the world's most advanced technologies, including TSMC, Apple, and GlobalFoundries, will be able to package and test their critical chips in the United States, enabling them to carry out the full end-to-end cycle of their chip manufacturing process in the United States,” the Commerce Department said.
However, the CHIPS Act also includes financial support for Vietnam and overseas semiconductor industries through the $500 million International Technology Security and Innovation (ITSI) Fund.
As such, Amkor's new factory in Bac Ninh province could eventually employ around 10,000 workers when fully operational, Vietnam+ reported.
U.S. Secretary of Commerce Gina Raimondo was certainly right when she said the proposed funding would make supply chains more secure, but it would likely create more jobs in Vietnam than in the United States.
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