The global semiconductor industry’s presence in Vietnam is further expanding! Semiconductor intellectual property core (IP) and EDA manufacturer Synopsys recently announced their collaboration with the Vietnam Information and Communication Ministry (MIC) and its subsidiary, the Vietnam ICT Industry Management Authority (AICTI), to promote semiconductor development in Vietnam. They will also support AICTI in establishing a semiconductor research institute in Vietnam.

Synopsys Technology has pointed out that on the 18th day, a Memorandum of Understanding (MoU) was signed at Synopsys Technology’s headquarters in Sunnyvale, California, USA. The MoU was signed in the presence of Vietnam’s Prime Minister Pham Minh Chinh, Minister of Information and Communication Nguyen Manh Hung, and other officials from the Vietnamese delegation, as well as Joachim Kunkel, the General Manager of Synopsys Technology’s Solution Business Group, and other senior executives from Synopsys Technology. The signatories included Mr. Lee Ming-che, Chairman and General Manager of Synopsys Technology in Taiwan, who also serves as the CEO of Synopsys Technology’s South Asia region, and Mr. Nguyen Thien Nhan, the Director of the Vietnam ICT Industry Management Authority. The MoU aims to jointly promote the development of the local semiconductor industry in Vietnam.

In fact, the Vietnam ICT Industry Management Authority is currently working on formulating a semiconductor development strategic plan in Hanoi. This plan includes leveraging Synopsys Technology’s advanced technology in prototype design and simulation to optimize System-on-Chip (SoC) software and hardware co-design. The collaboration aims to establish a chip development and advanced simulation center, nurture innovative IC design startups, and enhance Vietnam’s research, development, and manufacturing capabilities in the semiconductor industry.

Nguyen Thien Nghia, the Director of the Vietnam ICT Industry Management Authority, expressed that Synopsys Technology is renowned for its leading semiconductor design software, IP, and software security solutions. Through this collaboration with Synopsys Technology, the Vietnam ICT Industry Management Authority can benefit from their world-class design technology and cultivate chip designers who can stay abreast of the latest industry trends, thereby contributing to the development of Vietnam’s semiconductor industry.

Lee Ming-che emphasized that the Vietnam ICT Industry Management Authority plays a pivotal role in promoting the development of Vietnam’s ICT industry and supporting its integration into the global semiconductor supply chain. He is pleased that Synopsys Technology can support the Ministry of Information and Communication of Vietnam in formulating strategic plans and establishing a semiconductor research institute in Vietnam that utilizes Synopsys Technology’s advanced technology.

Lee Ming-che further added that Synopsys Technology is committed to helping Vietnam’s semiconductor industry nurture IC design talents and research and development capabilities. The successful development of the semiconductor industry requires teamwork, and Synopsys Technology will closely collaborate with the Vietnam ICT Industry Management Authority to assist Vietnam in solidifying its leading position in the semiconductor sector within the Southeast Asian region.

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In recent times, Foxconn’s System-in-Package (SiP) packaging and testing subsidiary, Shunsin-KY (6451), has benefited from a boost in orders. Additionally, with the expected full-scale production capacity of their new factory in Vietnam in the second half of the year, industry experts anticipate that Shunsin’s performance will improve sequentially in the latter half of this year, potentially setting the stage for record-breaking profits next year.

Shunsin’s fundamental outlook appears promising, as evidenced by its strong performance in the stock market yesterday (13). The stock closed at its daily limit of 124.5 yuan, marking an impressive gain of 11 yuan and reaching its highest level since mid-July.

In recent years, Shunsin has responded to robust demand in high-speed fiber optic communication by initiating expansion operations. The new factory in Vietnam is now operational, with orders coming in simultaneously. It is expected that production capacity will begin to ramp up before the end of the year. Experts note that Shunsin has secured orders from major American network communication giants, and its 400G Silicon Photonics (CPO) module products are poised for early production. Anticipations are that the 800G CPO module will gradually come into play next year.

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After the U.S.-China trade war, many large technology conglomerates shifted their investments to Vietnam, boosting Vietnam’s chip exports. The government of U.S. President Joe Biden is planning to support Vietnam in quickly becoming a chip supply center to mitigate supply chain risks related to China. However, Vietnam is facing a significant challenge in the long-term shortage of engineers.

The U.S. “Friend-shoring” strategy: Vietnam enjoys significant benefits

In order to concentrate supply chains within like-minded geopolitical allies, the U.S. government is actively promoting the “Friend-shoring” strategy. Due to the warming relations with the United States, Vietnam has clearly benefited from the recent semiconductor supply chain reorganization in the U.S. The United States hopes to establish Vietnam as a hub for semiconductor production, but the severe shortage of engineering talent is the biggest concern for the development of Vietnam’s semiconductor industry and a significant challenge to the U.S. plan to rapidly bolster Vietnam as a chip center to offset supply chain risks related to China.

Following the G20 summit, President Joe Biden visited Vietnam with the goal of further enhancing bilateral relations, with semiconductors expected to be a focal point. Biden is prepared to assist Vietnam in increasing semiconductor production.

The semiconductor industry holds strategic importance, and “Friend-shoring” has consistently been one of the key incentives the United States uses to persuade Vietnam’s Communist Party leaders to agree to formal relationship upgrades. Initially, Vietnam was hesitant due to concerns about potential negative reactions from China.

Talent only meets 1/10 of the demand

The enhancement of relations with the United States could bring in billions of dollars in new private investment and some public funding for Vietnam’s semiconductor industry. However, industry officials, analysts, and investors say that the severe shortage of trained engineers is likely to be a significant barrier to Vietnam’s rapid development in the chip sector.

Vu Tu Thanh, the head of the Vietnam office of the US-ASEAN Business Council, stated that “the available number of hardware engineers falls far short of what is needed to support billions of dollars in investment,” accounting for only about one-tenth of the expected demand over the next ten years.

With a population of around 100 million, Vietnam has only 5,000 to 6,000 trained hardware engineers for semiconductors, while the industry is projected to need 20,000 engineers within the next five years and 50,000 within the next decade.

Hung Nguyen, the Senior Manager of Supply Chain Projects at RMIT University Vietnam, also pointed out that Vietnam lacks semiconductor software engineers.

Regarding this issue, various Vietnamese government departments, including labor, education, information technology, science and technology, and foreign affairs, have not responded.

Expanding from Back end Manufacturing to Design

According to Vietnamese government data, Vietnam’s semiconductor industry exports to the United States are worth over $500 million annually, primarily in the backend manufacturing phase of the supply chain, which includes chip assembly, packaging, and testing. However, the industry is gradually expanding into areas like design.

The White House has not yet specified which parts of the Vietnamese semiconductor industry will be prioritized, but U.S. industry executives suggest that the backend is a crucial growth sector.

China plays a significant role in these considerations. According to data from the Boston Consulting Group, nearly 40% of global backend manufacturing was in China in 2019, with the United States accounting for only 2%, and an additional 27% in Taiwan. China’s increased military activities around Taiwan and rising tensions have raised concerns about supply chain vulnerabilities.

Intel, an American company, has been operating the world’s largest semiconductor assembly, packaging, and testing factory in Vietnam for 15 years. However, Beijing still dominates the industry. Nonetheless, during U.S. Treasury Secretary Janet Yellen’s visit to Vietnam in July, it was announced that Amkor, a U.S. company, is building “an advanced semiconductor assembly and testing mega-factory” near Hanoi.

Furthermore, more private investments may come into play, particularly if a significant portion of the $5 billion provided for the global semiconductor supply chain under the CHIPS Act ultimately finds its way to Vietnam.

Legislative and administrative coordination is no easy task, and the short-term shortage of technical talent complicates matters

According to Hong Nguyen, the United States may also be interested in increasing the supply of semiconductor raw materials from Vietnam, especially rare earths. Vietnam is estimated to have the world’s second-largest rare earth reserves, trailing only behind China.

Vietnam is also making progress in the field of semiconductor design. The U.S. semiconductor design software company Synopsys has already begun operations in Vietnam, while Marvell, a competitor, has reduced its research and development teams in China and plans to establish a “world-class” center in Vietnam.

Furthermore, Vietnam has attracted investment interest from semiconductor manufacturing equipment producers and has ambitious plans to establish its first semiconductor manufacturing fab by the end of this century.

However, if the issue of the shortage of skilled labor is not adequately addressed, Vietnam’s ambition to develop the semiconductor industry may be challenging to realize and become more vulnerable when facing regional competitors like Malaysia and India.

Intel has repeatedly urged Vietnamese authorities to expand the pool of skilled workforce.

Insiders revealed earlier this year that Intel was considering doubling its $1.5 billion business in Vietnam, but it is currently unclear whether this plan still exists after the company announced significant investments in Europe in June.

Intel has not responded to requests for comment.

On Amkor’s Vietnamese website, there are approximately 60 job openings, primarily for engineers and managers.

Vu Tu Thanh suggests that one possible workaround could be to relax regulations in Vietnam regarding work permits for foreign engineers until the domestic skilled labor force is sufficiently developed.

However, this would require legislative reforms and expedited administrative procedures, which, according to several Vietnamese diplomats and entrepreneurs, is not an easy task.

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Vietnam Investment is one of the favored overseas investment hotspots in recent years, primarily due to the proactive economic reform and open policies implemented by the Vietnamese government, which offer more opportunities and conveniences for foreign investors. However, there are various types of investments in Vietnam, including manufacturing, construction projects, real estate, high-tech industries, and more. So, what’s the best choice for investing in Vietnam? Furthermore, there are also benefits and risks associated with investing in stocks, funds, and other areas in Vietnam, along with considerations that investors should be aware of to gain a clear understanding of the investment environment in Vietnam before making decisions.

Vietnam Investment

Investing in Vietnam has gained significant momentum in recent years, primarily because Vietnam is one of the world’s top ten most populous nations, boasting a vast labor force and market potential, as well as abundant human resources. Its government actively promotes economic reforms and open policies, attracting a substantial inflow of foreign investment. Vietnam possesses rich natural resources and mature industries in manufacturing, agriculture, real estate, and more, making it a country with enormous development potential. Against this backdrop, Vietnam has become the preferred destination for many multinational corporations and investors. Furthermore, in recent years, Vietnam’s economy has maintained stable growth, making it one of the fastest-growing countries in the Southeast Asian region.

*Disclaimer: All investment-related articles published by ‘Shibatang’ are for reference purposes only. While we strive to provide accurate information, we do not guarantee absolute accuracy. If any inaccuracies in the information lead to losses, we shall not be held responsible. The market is constantly changing, and readers should carefully analyze the latest market information before making investment decisions. Readers should make independent decisions based on personal considerations. If any losses occur due to the recommendations or information in this article, it is not the responsibility of ‘Shibatang,’ its editors, journalists, or related authors. Our website or social platforms shall not be held responsible for any consequences resulting from the content of the reported information

Vietnam’s economic growth has remained within a stable range, making it one of the fastest growing economies in Southeast Asia (Source: Tron Le@unsplash)

Vietnam Investment Analysis

Vietnam Investment Environment

The investment environment in Vietnam has become increasingly promising as the country continues to develop. In the following sections, Shibatang will introduce the advantages of investing in Vietnam and the associated investment risks. This will provide a deeper understanding of the investment environment in Vietnam for those interested in investing.

Advantages of the Vietnam Investment Environment

1. Government Support: The Vietnamese government actively promotes economic reforms and open policies, offering various investment incentives and benefits, including tax exemptions, land leasing, and financing support.

2. Strategic Geographic Location: Vietnam is located in the heart of Southeast Asia, in proximity to major economic powers such as China, South Korea, and Japan. It serves as a gateway for ASEAN countries to the Asia-Pacific region.

3. Vast Market Potential: With nearly 100 million inhabitants, Vietnam possesses substantial market potential, especially in sectors like consumer goods, real estate, and tourism, offering significant room for development.

4. Abundant Workforce: Vietnam boasts a rich labor force and talent pool with relatively lower labor costs. Additionally, the quality of the workforce in Vietnam continues to improve.

5. Political Stability: Vietnam maintains a relatively stable political environment, with the government prioritizing social stability and security, providing a secure environment for investments.

6. Rapid Economic Growth: In recent years, Vietnam has consistently maintained stable economic growth, making it one of the fastest-growing economies in the Southeast Asian region.

7. International Cooperation and Free Trade Agreements: Vietnam actively promotes international cooperation and the signing of free trade agreements, expanding market opportunities and benefits for investors

Vietnam’s investment environment continues to become more promising as the country develops (Source: Peter Nguyuen@unsplash)

Vietnam Investment Risks

1. Legal Risks: Vietnam’s legal system is relatively complex, and investors may face legal risks, especially in areas such as intellectual property and labor laws.

2. Economic Risks: Vietnam’s economic development is still in its early stages and relies heavily on exports and foreign direct investment.

3. Policy Risks: Vietnam’s government policies and legal environment can change rapidly, requiring investors to closely monitor policy dynamics and legal changes.

4. Market Risks: The Vietnamese market carries a degree of uncertainty and volatility, necessitating market analysis and risk management skills on the part of investors.

5. Talent Risks: While Vietnam has abundant labor and talent resources, some industries and sectors may face a shortage of high-end talent, potentially affecting business operations.

6. Financial and Exchange Rate Risks: Vietnam’s financial market is relatively immature, and investors may encounter financial risks such as currency exchange rate fluctuations, credit risks, and liquidity risks.

There are always risks in investment, so you should understand it carefully and invest carefully (Source: Freepik licensed)

Types of Investments in Vietnam

There are several noteworthy types of investments in Vietnam, and below, we will introduce seven popular investment categories:

1. Real Estate Investment in Vietnam
2. Stock Market Investment in Vietnam
3. Investment in Vietnam Funds
4. Manufacturing Industry Investment in Vietnam
5. Investment in the Tourism Industry in Vietnam
6. High-Tech Industry Investment in Vietnam
7. Investment in Vietnamese Bonds

There are 7 main types of investment in Vietnam (Source: Freepik licensed)

Vietnam Investment Analysis

Vietnam is a rapidly developing economy that has actively promoted economic reforms and openness in recent years, attracting a significant influx of international investors. The Vietnamese government is keen on improving the investment environment, reforming investment policies, and supporting both domestic and foreign investors in participating in the Vietnamese market.

Vietnam’s investment advantages include abundant human resources, low labor costs, rich natural resources, and a favorable geographical location. Vietnam is also one of the most promising markets in Southeast Asia, with a large domestic market and substantial export potential.

Of course, Vietnam’s investment environment also presents some challenges and risks, such as policy changes, an imperfect legal system, and intense market competition. Therefore, investors need to carefully assess investment risks and opportunities, devise suitable investment strategies, and implement risk control measures. Overall, Vietnam is an emerging market worth investing in, but investors should have a good understanding of the market and risk management awareness.

Investors need to carefully evaluate investment risks and opportunities, and formulate appropriate investment strategies and risk control measures (Source: Racool_studio@freepik)

After reading the introductions, advantages, and risks of the seven popular types of investments in Vietnam, investors should have gained a good understanding. It’s worth noting that currently, real estate investment in Vietnam is one of the most popular investment options. Vietnam’s large population presents tremendous market potential, and the real estate market in Vietnam continues to expand, offering more investment opportunities. Additionally, the Vietnamese real estate market can provide relatively high returns, which is advantageous for investors seeking substantial returns.

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Investment in high-tech industries has become a significant direction for Vietnam’s economic development. The Vietnamese government, by promoting the development of high-tech industries, aims to attract both domestic and foreign investors, enhance Vietnam’s industrial competitiveness and innovation capabilities, and accelerate the realization of industrialization and modernization goals. Currently, Vietnam’s high-tech industries are primarily concentrated in sectors such as electronics, telecommunications, machinery, and life sciences.

Vietnam’s investment in high-tech industries has become an important direction of Vietnam’s economic development (Source: ThisisEngineering RAEng@unsplash)

Advantages of Investing in High-Tech Industries

1. Vietnam boasts relatively low labor costs, especially when it comes to hiring university graduates. This cost advantage benefits high-tech industries by reducing operational expenses.

2. The Vietnamese government is actively promoting economic reforms and open policies, which have improved the investment environment. These reforms create favorable conditions for the development of high-tech industries.

3. Vietnam possesses a wealth of human resources, particularly young, well-educated individuals who are well-suited for high-tech roles. This ample talent pool forms a strong foundation for the development of innovative technological industries.

Vietnam has abundant human resources, especially young and well-educated high-tech talents (Credit: Alexandre Debieve@unsplash)

Risks of Investing in High-Tech Industries

1. Vietnam’s regional development is not uniform, leading to disparities in the development of high-tech industries. Balancing regional development is essential to address this issue.

2. The high-tech industry in Vietnam is highly competitive. Investors are advised to have strong technical expertise and market experience to establish a foothold in this competitive market.

3. With the rapid growth of the tech sector in recent years, many tech employees frequently switch jobs. This turnover requires employers to regularly hire new talent to fill vacant positions.

Vietnam’s high-tech industry market is highly competitive, and investors should have strong technical strength and market experience (Source: Lars Kienle@unsplash)

Considerations for Investing in High-Tech Industries in Vietnam

1. High-tech industries involve intellectual property issues, and investors need to pay attention to the local intellectual property protection situation.

2. High-tech products require ensuring quality and safety; therefore, investors should choose production suppliers with rich experience and a good reputation.

3. Investors need to be prepared for the ongoing management and operation of high-tech projects to ensure their long-term stable development.

The high-tech industry involves intellectual property issues, and investors need to pay attention to local intellectual property protection (Source: ThisisEngineering RAEng@unsplash) 

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