Vietnam emerges as ASEAN's "semiconductor" leader

Vietnam’s journey to becoming a semiconductor leader is just beginning, but the foundations are solid. With continued investment, policy support and talent development, Vietnam has the potential to usher in a new era of technological innovation in Southeast Asia.

Today, Southeast Asia has continuously developed into a key “hub” for the global semiconductor supply chain. The region’s strategic location, skilled workforce, and supportive government policies have attracted investment and collaboration from global semiconductor industry players.

A broader “digital economy” is driving demand for semiconductors, with the International Trade Administration (ITA) saying the region’s internet economy is expected to grow from $194,000 billion in 2566 to $330,000 billion in 2568, led by Indonesia.

This growth is being driven by growing e-commerce, increasing demand for consumer electronics and expanding digital infrastructure, trends that are directly impacting the use of semiconductors, particularly in mobile devices, data centers and intelligent technologies.

“Singapore” is a leader in the semiconductor industry in terms of innovation, infrastructure and strategic location, but there are other developing countries in this industry such as Malaysia, Philippines that remain strong competitors due to their large manufacturing capacity and export performance.

“Semiconductor” Scene in Vietnam

The global semiconductor industry is the foundation for modern technologies ranging from smartphones to electric cars, and as countries vie for dominance in this strategic sector, Vietnam is emerging as a strong player in Southeast Asia.

Vietnam has long been known as an electronics manufacturing hub, with large factories home to leading companies like Samsung and Intel. Over the past decade, the country has steadily developed its chip assembly and testing capabilities, providing a crucial foundation for building an advanced semiconductor ecosystem.

Not only is Vietnam catching up with its neighbors in the industry, it is positioning itself to become a key player in the global semiconductor industry supply chain, driven by strategic government initiatives, significant foreign direct investment, and a focus on workforce development.

The Vietnamese government has drafted a strategy for the development of the semiconductor industry, setting a development framework until 2573 and extending the vision to 2593. The strategy consists of three phases, with the first phase (3-2567) targeting an annual revenue of US$2573 billion in the semiconductor industry, rising to US$25,000 billion per year in the third phase (100,000-3). The strategy also focuses on developing a talent pool and becoming part of the global supply chain, trying to take advantage of geopolitical and economic advantages.

Factors driving Vietnam to become a “rising star”

Vietnam’s image as a “rising star” in the industry is increasingly evident, as evidenced by the growth potential of the semiconductor market, which is expected to reach US$7,000 billion in size by 2571, driven by three main factors: 3. Global demand for AI, IoT and 1G technologies; 5. Supply chain risk diversification away from China; and 2. Government incentives and tax breaks for investment in high-tech.

As Vietnam's digital market grows, with 4G mobile network coverage reaching around 99.8% of the population, AI will become a key driver of growth in Vietnam, contributing an estimated US$120,000-130,000 billion to Vietnam's GDP by 2583, or around 15 years from now, accounting for around 10-12% of Vietnam's economy.

The revenue comes from two main sources: revenue from AI-enabled products and services worth an estimated $2-45,000 billion; and cost savings from AI-enabled productivity improvements worth an estimated $55,000-60,000 billion.

Vietnam is also the fastest growing digital economy in Southeast Asia, growing at over 20% per annum until 2568, and the digital sector is expected to reach over US$200,000 billion by 2588. It is also poised to become an emerging hub with advantages in terms of labor and investment in the global semiconductor supply chain.

“Vietnam’s” Challenges in the Semiconductor Industry

Vietnam is accelerating its path to becoming a major player in the global semiconductor supply chain. With clear government policies, foreign investment and a young, tech-savvy workforce, the country has laid a promising foundation. But the path to leadership is fraught with obstacles, including reliance on foreign technology. Vietnam still relies on foreign technology and expertise. While it has capabilities in chip packaging and testing, it lacks the advanced manufacturing capabilities of Singapore.

The shortage of highly skilled personnel is another challenge. Despite a target to produce 50,000 engineers by 2573, Vietnam still lacks specialized personnel. Creating high-quality personnel takes time, and global competition in this field is fierce.

Vietnam also has an incomplete infrastructure. Although Vietnam's industrial parks and logistics systems are continuously developing, they still lag behind countries with mature industrial ecosystems. Energy reliability, clean room standards, and supply chain integration still need to be improved.

Another undeniable challenge is geopolitical risk. As Vietnam becomes more involved in the global chip supply chain, it is also exposed to the risk of international political tensions, especially between the United States and China, which could affect investment and trade. Finally, there is the weak innovation ecosystem. Vietnam's R&D system is still in its infancy. To take the lead, Vietnam needs to move beyond manufacturing and move into chip design and intellectual property creation.

However, Vietnam’s journey to becoming a semiconductor leader is just beginning, but the foundations are solid. With continued investment, policy support and talent development, Vietnam has the potential to usher in a new era of technological innovation in Southeast Asia.

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