Vietnam's Chip Ambitions: From Assembly Line to Design Floor

$165 billion. That's how much Vietnam earned from electronics exports in 2023, representing 41% of the country's total exports. But here's the catch: most of that value came from the lowest rung of the semiconductor ladder—assembly. Now Vietnam wants to climb higher.

Breaking Ground, Breaking Patterns

At Hoa Lac Hi-Tech Park in Hanoi, state-owned technology and defense company Viettel recently broke ground on Vietnam's first integrated semiconductor production facility. This isn't just about building another factory. It's about mastering the entire semiconductor value chain—from design to fabrication to assembly.

The global semiconductor industry operates in three distinct phases. Design and fabrication capture most of the value, requiring specialized software and expensive lithography machines made only in the Netherlands. Assembly—where chips are packaged, tested, and shipped—adds the least value but employs the most people. Vietnam has excelled at assembly. Now it wants to move upstream.

Viettel's facility aims to start trials by 2027 and reach full operation by 2030. The initial focus will be 32-nanometer chips—far from the 2-3 nanometer cutting-edge chips produced by TSMC, but still a significant leap for indigenous Vietnamese capabilities.

The Human Capital Gambit

Behind Vietnam's semiconductor ambitions lies an aggressive human capital strategy. The country plans to train 50,000 design engineers by 2030 and support over 100,000 workers by 2040. Currently, 30% of Vietnamese students are enrolled in STEM fields. The government wants to push this to 35% by 2030 through scholarships and other incentives.

This isn't wishful thinking. Vietnam already has structural advantages that make this transition plausible. The country's explosive growth has been driven by foreign investment in electronics manufacturing. Companies like South Korea's LG have built extensive production networks in Vietnam, creating a deep pool of technical expertise and supply chain relationships.

The Electronics Export Engine

Vietnam's electronics dominance is striking. At 41% of total exports, electronics represent a higher concentration than other major regional exporters like Thailand. This indicates Vietnam has already developed an extensive techno-industrial base for electronics production, including semiconductor assembly.

The move into fabrication represents both a logical next step and an ambitious leap. Logical because Vietnam has the manufacturing infrastructure and workforce. Ambitious because semiconductor fabrication requires not just physical plants but also deep technical knowledge, advanced materials science, and complex supply chains.

State-Led vs. Market-Driven

Vietnam's approach—led by a state-owned defense and technology company—contrasts with the market-driven models seen elsewhere in Asia. While countries like South Korea built their semiconductor industries through private conglomerates like Samsung, Vietnam is betting on state coordination and long-term planning.

This raises interesting questions about industrial policy effectiveness. Can state-owned enterprises move fast enough to compete in the rapidly evolving semiconductor space? Or does government backing provide the patient capital and strategic coordination that markets sometimes lack?

Regional Competition Intensifies

Vietnam isn't alone in this ambition. China continues massive investments in semiconductor self-sufficiency. India is building its own chip fabrication capabilities. Malaysia and Thailand are also moving up the value chain. Each country is taking a different approach—some market-led, others state-directed, most somewhere in between.

For global supply chain strategists, this proliferation of semiconductor capabilities represents both opportunity and complexity. More production centers could mean more resilient supply chains and competitive pricing. But it also means navigating an increasingly complex web of national industrial policies, export controls, and geopolitical tensions.