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Vietnam Enters the Chip Race

Published: 4.23.2024

According to Bloomberg, Vietnam has emerged as one of the top 4 leading countries in Asia exporting semiconductor chips to the US market. However, experts and businesses acknowledge that domestic enterprises are only laying the initial groundwork for domestic chip production. 


Over the past seven months, chips from Vietnam have accounted for over 10% of the US's imported chip volume. 


In February 2023 alone, Vietnam exported chips to the US with a total value of $562.5 million, an increase of approximately $240.8 million compared to February 2022. In terms of sales, Vietnam ranks third in Asia, after Malaysia and Taiwan, in semiconductor chip exports to the US. 


Playground for FDI Giants 


Regarding Vietnam's semiconductor chip export activities in the early months of this year, Mr. Nguyen Van Toan, Vice Chairman of the Foreign Investment Business Association, stated that the majority of chip exports are currently from foreign direct investment (FDI) enterprises. 


In the semiconductor chip manufacturing sector, most major FDI enterprises such as Samsung, Intel, and Foxconn dominate. It's challenging for Vietnamese enterprises to participate, with most only involved in assembly, while FDI firms hold the technological know-how. 


According to Mr. Toan, semiconductor chip production involves two stages: chip design, software operation, and manufacturing, assembly into complete chips. Large chip manufacturing companies in Vietnam only lease land, factories, and Vietnamese labor, while the technology remains entirely theirs. Very few domestic enterprises participate in Intel's supply chain and production. 


Mr. Toan believes that while chip exports benefit Vietnam in terms of taxes, a deeper transformation of a portion of the production value into its own is needed to achieve high added value. 


A technology expert suggests that what Vietnam gains from exporting chips is an improvement in its image. Instead of being solely known for textile exports, Vietnam now adds chips to its portfolio, demonstrating its effectiveness in attracting FDI in high-tech sectors. This sets the stage for Vietnam to move further towards having genuinely chip-producing enterprises rather than just performing final assembly stages. 


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