Advanced technology is a key competitive axis in the global power struggle

The Fourth Industrial Revolution is a combination of physical technology, digital technology and biotechnology that opens up many opportunities for the improvement and development of economic, political and social life of the world. Along with global economic integration and market economic development, the technological revolution has brought about new trends.

One of the most important competitive axes in this global struggle for power is advanced technology. And no cutting-edge technology is more important than semiconductor and artificial intelligence. The convergence of great power competition, a trillion-dollar semiconductor supply chain and rapid AI advances has brought us to a critical and sensitive juncture in world affairs. AI plays a central role in this evolution - a source of leverage, a weapon, and a high potential tool for this great struggle for power. Among them, the semiconductor industry is expected to experience strong growth in the near future as it meets the growing demand for semiconductor materials in emerging technologies such as artificial intelligence (AI), autonomous vehicles, the internet of things (IoTs) and 5G. As a result, suppliers are constantly striving to spur innovations and gain competitive advantages in the market.

Semiconductor trend

This trend is evolving with three major developments in the semiconductor technology sector.

First, the semiconductor industry is expected to grow from US$720 billion in 2024 to US$1.21 trillion in 2029, presenting a CAGR growth of 10.86% over the forecast period (2024-2029). The sector is expanding rapidly as semiconductors are becoming the fundamental building blocks of modern technology.

Second, this unprecedented pace of semiconductor technology adoption not only highlights the transformative potential of AI but also sets the stage for a major shift in global connectivity and economic systems. Look at the speed at which technology has permeated our lives. It took 75 years for the landline telephone to reach 100 million subscribers globally. By contrast, the mobile phone achieved this milestone in just 16 years, and the internet in just 7 years. It took Apple Store two years and ChatGPT, incredibly, in just two months to reach this milestone.

Third, the geopolitics of chip technology will shape the future of AI. Yet, the world’s most important cutting-edge technology is almost all produced in a single facility in Taiwan (China). Moreover, that facility is located in one of the most politically tense regions on earth - a region where it is believed that war is inevitable this decade. This major risk drives leading chip manufacturers such as Nvidia and Samsung to seek new geopolitical locations with potential natural resources, human infrastructure and market connections, especially with stable political context like Vietnam, to minimize risks in the long run.

In fact, the increased interest and use of AI creates higher demand for semiconductors, pushing the industry to innovate faster and produce more capable and efficient chips. AI, supported by the semiconductor supply chain, can empower economic sectors, including defense and security, to develop by leaps and bounds because AI can boost productivity growth by automating tasks, optimizing processes and supporting decision making. A recent study reported that AI-enabled consultants completed an average of 12% more tasks and 25% faster.

However, despite its many benefits, AI also poses a wave of challenges. AI productivity has been largely captured by wealthy countries and giant tech firms to create a handful of global superstars. This reality risks widening the income gap as leading countries earn the lion’s share of benefits, thus leaving developing countries behind. Furthermore, AI may erode competitive advantages of many developing economies that rely on cheap labor, and it could chip away at economic incentives for trade and investment, weakening traditional economic foundations and potentially halting progress in narrowing income inequality. AI is expected to automate many industries, upend traditional growth models and development strategies, disrupt the link between wage growth and productivity, and amplify unemployment and inequality. The advent of big data and AI has also raised significant privacy concerns, posed new risks of algorithmic bias, exacerbated cybersecurity vulnerabilities, and fueled disinformation.

Semiconductors and artificial intelligence are the most critical cutting-edge technologies

Solutions for sustainable semiconductor development

Embracing new development trends of the technological revolution and aiming at entrepreneurship for the country in the new era, the Prime Minister signed Decision 1018/QD-TTg dated September 21, 2024 on Vietnam Semiconductor Development Strategy to 2030, with a vision to 2050 - the industry expected to generate US$1 trillion of revenue by 2030. According to technology strategists, to lay a solid foundation for the sustainable development of the country’s fledgling semiconductor industry to gradually move towards an era of national development with national competitiveness, labor productivity and higher living standards of the people in mastering advanced technologies of the 4.0 era, it is necessary to focus on deploying and executing the following four basic solutions:

First, globalization and international economic integration programs are social resources with cross-border cooperation in generating new global institutions that can be trusted to connect partners and markets globally. With active policies for comprehensive strategic partnerships with major economies and high-tech development, Vietnam needs to harness these resources to seize this transformation opportunity now to shape the trajectory of the semiconductor industry and strongly promote international investment partnership connections.

Second, the semiconductor industry is undergoing a transformation period, driven by significant investments and strategic partnerships. This growth is largely steered by AI advances, which have reshaped the demand for semiconductor technology. AI has significantly reformatted the semiconductor industry by driving the demand for specialized chips designed to perform complex calculations. Therefore, in the Industrial Cluster Strategy, it is necessary to focus on building a strategy to link the AI industry with the semiconductor industry in particular and key industries in general such as agriculture, energy, transport infrastructure (including logistics), marine economy and high technology to integrate AI to improve the quality of products and services.

Third, to achieve sustainable semiconductor development, it is necessary to build an AI Ecosystem in provinces and cities by developing the IT industry and domestic AI companies, promoting partnerships with international tech firms and accelerating AI applications in the government to speed up the construction of effective institutions, a fair market economy, promote technology transfer and enhance labor productivity. Furthermore, it is necessary to develop digital infrastructure platforms (robust broadband, data storage capacity and digital capabilities) and skills development (from basic digital knowledge to advanced AI research to ensure new skills integrated into school curricula and professional training).

Fourth, it is important to develop governance frameworks that ensure responsible semiconductor and AI technology development by adhering to ethical standards, social and environmental values to avoid risks to employment, privacy, cybersecurity and fake news dissemination and promote the circular economy

Certainly, in national development, catalyzed by the successful implementation of the 2021-2025 Socioeconomic Development Plan, the semiconductor and AI technology strategy will be both a driving force and a basic product resource to make decisive contributions to strong economic development as well as ensure national defense and security in the era of transformation, takeoff and standing shoulder to shoulder with developed economies in the region and the world.

Dr. Doan Duy Khuong