Global chip firms tapping local talents and growing demands in Vietnam, says DIGITIMES Research

Vietnam's semiconductor landscape is evolving rapidly, with the central region emerging as a new destination for foreign semiconductor firms, complementing the established chipmaking cluster in the north and the burgeoning software and IC design hub in the south. According to DIGITIMES Research, ongoing global geopolitical tensions, Vietnam's abundant local talent pool, and its policy initiatives to achieve a balanced development across regions will continue shaping the country's semiconductor ecosystem.

In mid-May, US-based Marvell Technology announced the opening of its third office in Vietnam, located in the central city of Da Nang. The development came after the establishment of its office in Ho Chi Minh City in 2023. In January, Da Nang's government told Marvell that it had identified semiconductors as a key growth driver for the city in the coming period, reports Bao Cong An Da Nang.

Similarly, Bao Dien tu Chinh phu reported that Synopsys had expanded its presence in Vietnam, increasing the number of its offices to four, including locations in Ho Chi Minh City and Da Nang, between 2020 and 2022. The company now employs nearly 500 engineers in the country.

Yen Chou, DIGITIMES Research analyst and project manager, noted that Marvell is taking advantage of Vietnam's relatively low-cost, high-skilled labor amid the growing demand for talent fueled by increased investments in the country's electronics sector.

Historically centered around traditional manufacturing and tourism, Vietnam's central region, including Da Nang, is poised for economic diversification. To achieve balanced development across regions, the Vietnamese central government is crafting policies to attract AI and semiconductor industries to Da Nang.

In southern Vietnam, Chou highlighted that Ho Chi Minh City boasts a higher concentration of software talent than other Vietnamese cities. Despite higher wages in the city, labor costs for high-skilled workers there and overall Vietnam remain lower than in other Asian markets. This, along with Vietnam's rapid economic growth and increasing demand for semiconductors, has created a favorable environment for chip firms like Synopsys to expand their presence.

Regarding northern Vietnam, Chou noted that Hanoi has been a key hub for semiconductor manufacturing in Vietnam, focusing on memory packaging and assembly to meet the needs of local consumer electronics and component suppliers, primarily from South Korea. Typically, IC backend houses in the region catered primarily to South Korean customers. Chou said following the establishment of the Amkor Technology facility in Bac Ninh in 2023, semiconductor suppliers are expected to diversify their customer base in Vietnam and abroad.

DIGITIMES Research notes that amid the G2 geopolitical tensions that drive the global supply chain relocation, the growth of the Vietnam semiconductor ecosystem is promising. Nevertheless, semiconductor manufacturers in northern Vietnam face challenges such as insufficient power supply and a relative talent shortage due to the region's historical role as a political rather than an economic hub.

Furthermore, Chou highlighted that while developed countries in Europe, America, and Japan ramp up domestic semiconductor production, it remains to be seen whether global market demand will be robust enough to sustain Vietnam's semiconductor export growth and foster industry-wide economies of scale.

Source: DIGITIMES Research, May 2024

About the analyst

Yen Chou received a master's degree from the Graduate Program for Political Economy at National Cheng Kung University. He worked as an assistant researcher at the Institute for Physical Planning and Information and as an analyst at DIGITIMES Research. His research focuses on Samsung's global investment and operation, the electronics industry in Vietnam, and the display industry in South Korea.

Credit: DIGITIMES Research