Assembly and testing facility for electronic microchips of Intel Products Vietnam Co., Ltd.

A destination with great potential

According to statistics from the Foreign Investment Agency (Ministry of Planning and Investment), in the first eight months of 2023, the UnS had 72 new investment projects in Vietnam with a total registered capital of US$489 million, a 132% increase compared to the same period last year. As of August 20, 2023, there were 1,286 effective projects with a total registered capital of US$11.7 billion in Vietnam. Currently, the US ranks 11th among 143 foreign investors pouring capital into Vietnam. This demonstrates the enormous potential for attracting investment from the US into Vietnam.

According to Do Van Su, Deputy Director of the Foreign Investment Agency, there is a shift of capital from North American investors to Vietnam. As of now, the American corporation Apple has completed the transfer of 11 manufacturing plants for audio-visual equipment to Vietnam. The familiar trio of Apple's partners in Vietnam, namely Foxconn, Luxshare, and Goertek, have all increased their capital and expanded their factories in the country recently.

Recently, the US Semiconductor Industry Association, along with several companies, visited Vietnam to explore the investment environment as a destination for shifting chip production. Information on the website of the US Embassy and Consulate General in Vietnam stated that notable agreements included Amkor Technology starting the operation of a semiconductor factory in Bac Ninh with a total investment of US$1.6 billion in October. This is Amkor's largest and most modern factory worldwide.

Additionally, Amkor Technology will invest US$1.6 billion from now until 2035 to build another factory in Bac Ninh province.

Amkor Technology Inc. is a semiconductor product testing and packaging services provider established in 1968. As of 2022, the company had approximately 31,000 employees worldwide and achieved revenues of US$7.1 billion.

The technology conglomerates Marvell and Synopsis also announced their investments in semiconductor incubation and design centers in Ho Chi Minh City.

Furthermore, during a meeting with Minister of Planning and Investment Nguyen Chi Dung in July, major US corporations such as AES, TIAA, CitiGroup, Mitsubishi Americas, Davidson Kempner Capital Management, S&P Global, among others, expressed great interest and confidence in Vietnam's investment and business environment. They pledged to expand their investments in Vietnam in the coming time. In March, a delegation of 50 major US corporations visited Vietnam to explore investment opportunities, including prominent names like Apple, Microsoft, Boeing, Meta, Google, among others.

According to experts, this is a turning point in US investment in Vietnam. With the cooperation of American technology companies, Vietnam is likely to exploit and produce semiconductors on a larger scale in 2024. Vietnam has an advantage in rare earth minerals in cooperation with the US, making it a favorable opportunity for both sides. In addition, Vietnamese businesses can become major suppliers for American technology giants like Foxconn and Luxshare in the future as the two countries take further steps in their bilateral relationship.

Improving the environment for attracting "eagles"

To attract FDI with a focus on internal development, Nguyen Anh Thi, Head of the Management Board of the HCM City High-Tech Park (HHTP), has stated that the HHTP regarded the quality of the workforce as one of the advantages for attracting investment because high-tech projects always require highly skilled labor. The HHTP has introduced the HCM City Semiconductor Electronics Center with the goal of training a high-quality workforce for the semiconductor industry, with expectations of attracting target investors and creating added value.

Additionally, the HHTP identifies specific investment segments and delves into design, packaging, and other processes, focusing on existing "anchor" investors like Intel. According to Nguyen Anh Thi, Vietnam needs to strengthen Intel's supply chain through supporting the development of domestic businesses and attracting new investors from the US and other countries within Intel's supply chain.

However, Thi also emphasized the investment environment needed to attract and retain "eagles," including American businesses. This involves improving procedures, expediting processes, providing maximum support to businesses, and maintaining stable policies. Additionally, non-tariff policies are necessary to ensure a competitive advantage and attract investments through infrastructure development, human resources, and research and development (R&D).

Don Lam, Co-founder and CEO of VinaCapital Group, noted that many large US investors were particularly interested in Hanoi in the field of high-tech development. Hanoi offers numerous advantages for semiconductor manufacturing and ecosystem development, including a concentration of universities, research institutes, a young and dynamic workforce, and readiness to access and develop the semiconductor industry when receiving investment and technology transfer from foreign partners. Therefore, this represents the biggest opportunity to date for Vietnam and, specifically, Hanoi to attract foreign direct investment for the development of the semiconductor industry. "With the interest of these businesses, we hope that at least five foreign businesses will invest directly in Hanoi to develop the semiconductor industry in early 2024." said Don Lam.

However, Don Lam also believed that developing semiconductors was not just about building a factory. This process requires an accompanying ecosystem consisting of components such as infrastructure, power grids, abundant high-quality human resources, research facilities, as well as upstream and downstream businesses of sufficient scale, including the participation of investment funds. Only through this can a stable and sustainable ecosystem be established and maintained.