Vietnam to Build Its First Semiconductor Foundry with $500M Investment

Vietnam’s First Foundry Approved, Marking a Major Milestone in Its Semiconductor Strategy

Vietnam has officially approved a $500 million investment (12.8 trillion VND) to build the country’s first semiconductor foundry, signaling a major breakthrough in its ambitious semiconductor development strategy. The project aims to strengthen Vietnam’s presence in defense, artificial intelligence (AI), and high-tech chip production and is expected to be completed before 2030.

Vietnam’s Three-Phase Semiconductor Development Roadmap

Vietnam’s National Semiconductor Strategy, signed by Prime Minister Phạm Minh Chính in September 2024, outlines a three-phase plan to establish itself as a global semiconductor hub by 2050.

Phase 1 (2024–2030): Laying the Foundation

Establish at least 100 chip design firms, one semiconductor manufacturing facility, and ten chip packaging and testing factories.

Utilize Vietnam’s geopolitical advantages and skilled workforce to attract foreign investment.

Offer up to 30% direct financial support (up to 10 trillion VND) for projects completed before 2030, alongside tax incentives and land-use benefits.

Phase 2 (2030–2040): Strengthening the Industry

Expand the ecosystem with at least 200 design companies, two semiconductor fabs, and 15 packaging and testing plants.

Increase localization in chip design and production to reduce dependence on foreign technology.

Phase 3 (2040–2050): Becoming a Global Leader

Vietnam aims to establish at least three chip manufacturing fabs, 20 packaging facilities, and 300 design companies.

Develop in-house semiconductor research and development (R&D) capabilities.

Achieve annual semiconductor industry revenues exceeding $100 billion, contributing 20-25% added value to the national economy.

Set a target for electronics industry revenue of $1.045 trillion by 2050.

To support this vision, the government is offering high-level incentives, including tax breaks, subsidies, and priority land allocation. A National Semiconductor Development Steering Committee, led by the Prime Minister, has also been established to oversee the initiative.

Challenges in Vietnam’s Semiconductor Aspirations

Despite these ambitious goals, building a cutting-edge semiconductor fab typically costs over $50 billion—far exceeding Vietnam’s initial $500 million investment. Industry experts, including John Neuffer, President of the U.S. Semiconductor Industry Association (SIA), have suggested that Vietnam should focus on chip packaging and testing rather than high-end semiconductor manufacturing.

However, Vietnam is keen to leapfrog competitors by securing foreign investment and nurturing local semiconductor talent, with firms like Viettel playing a key role in developing an integrated domestic supply chain.

Vietnam’s Competitive Edge in Packaging, AI, and Compound Semiconductors

Although its first foundry is yet to break ground, Vietnam is already a major player in the midstream and downstream semiconductor supply chain. The country has attracted $11.6 billion in foreign investment across 174 semiconductor-related projects, primarily in chip packaging and testing.

Key Foreign Investments in Vietnam’s Semiconductor Industry

Intel: Vietnam hosts Intel’s largest global chip packaging and testing plant, employing over 2,700 workers.

Amkor Technology: Invested $1.6 billion in a packaging and testing facility in Bắc Ninh Province, with an annual capacity of 3.6 billion chips, contributing 5% of the global semiconductor packaging market.

Hana Micron Vina (South Korea): Invested nearly $600 million in a semiconductor packaging plant in Bắc Giang Province.

PSMC (Powerchip Semiconductor Manufacturing, Taiwan): Exploring investments in chip fabrication in Vietnam.

AI and Semiconductor Expansion Plans

Vietnam is also aggressively developing its AI and data processing capabilities:

NVIDIA: Signed a strategic AI partnership with the Vietnamese government in December 2024, including plans for an AI research and data center.

FPT Corporation: Partnered with NVIDIA on a $200 million AI factory in Vietnam.

Vietnam is also venturing into advanced semiconductor materials:

Foxconn subsidiary Zhen Ding Technology plans an $80 million integrated circuit (IC) packaging factory in Bắc Giang Province, set to launch in 2026.

Samsung Electronics is expanding its $1 billion investment in semiconductor and chip production in Vietnam.

Local firms like Viettel are experimenting with importing semiconductor equipment to support domestic chip design and fabrication.

Bridging the Talent Gap: Vietnam’s Semiconductor Workforce Strategy

To address the shortage of skilled semiconductor engineers, the government has launched a Semiconductor Talent Development Program, aiming to train 50,000 professionals by 2030:

42,000 engineers

500 PhDs specialized in semiconductor research

Incentives include tax benefits, R&D grants, and subsidies for foreign semiconductor firms. The government is also allowing companies to reinvest up to 20% of taxable income without paying corporate taxes—a strategy designed to attract long-term investments and technology transfers.

Opportunities & Obstacles in Vietnam’s Semiconductor Journey

While Vietnam’s semiconductor ambitions are impressive, it faces several key challenges:

Infrastructure limitations: Power shortages and unstable electricity supply could hinder fab operations.

Dependence on imported technology: Vietnam lacks access to cutting-edge semiconductor IP and equipment.

Global competition: Countries like Malaysia and Singapore are also competing for semiconductor investment.

However, Vietnam’s low labor costs, strategic location, and government incentives provide a unique opportunity to secure a foothold in the mature chip manufacturing sector. By focusing on automotive and telecom chips, strengthening international partnerships, and leveraging existing strengths in packaging and testing, Vietnam could successfully establish its first semiconductor foundry before 2030.