In the World Bank (WB)'s classification updated in July, Viet Nam was upgraded to the upper-middle-income economy category. The next challenge for the country is to reduce their reliance on low-cost labor and develop more advanced industries.

According to the WB, an economy is classified as upper-middle income if its gross national income (GNI) per capita ranges from US$4,636 to US$14,375 in 2025. Based on this indicator, Viet Nam is gradually narrowing the gap with Indonesia.

Nikkei Asia highlighted that the nation has increased its national income through an export-driven growth model.

Signing trade agreements with numerous countries and regions around the world has helped Viet Nam attract foreign investment while establishing manufacturing hubs for electronic components and electrical equipment, it noted.

In June, South Korean company LG Innotek announced plans to build a semiconductor substrate manufacturing plant in Viet Nam, with a projected total investment of around US$1 billion.

Viet Nam now seeks not only to develop downstream stages of the chip manufacturing process, such as assembly, packaging and testing, which are labor-intensive, but also to move into more technology-intensive upstream stages, such as fabricating integrated circuits on semiconductor wafers.

According to the Strategy for Viet Nam's semiconductor industry development through 2030, vision to 2050, from 2030 – 2040, Viet Nam will work to become a global semiconductor and electronics center while developing the semiconductor and electronics industries that combine both self-reliance and FDI.

The Southeast Asian country targets to have least 200 design companies, two manufacturing factories, and 15 packaging and testing plants, and gradually ensure self-sufficiency of design and production technologies for specialized semiconductor products.

It also targets annual revenues of over US$50 billion and US$485 billion for the semiconductor and electronics industries respectively, which are expected to record an added value growth rate of 15 – 20 percent.

Meanwhile, more than 100,000 semiconductor engineers and graduates will be available during 2030 - 2040.

In recent January, Viet Nam's first semiconductor chip manufacturing plant started construction.

The project, launched by the military-run Viettel Group, marks a pivotal moment as Viet Nam plans to create its own semiconductor manufacturing ecosystem./.