Vietnam Semiconductor Industry Avenues for Breakthrough and Investment Opportunities

Vietnam is emerging as a preferred investment hub for the semiconductor industry, drawing substantial capital and attention from global corporations. The evolution and potential of the semiconductor sector have direct implications for the industrial real estate market, driven by the escalating demand for facilities that satisfy infrastructure and service prerequisites.

Development hotspot

The semiconductor industry plays a key role in manufacturing modern electronic devices by providing essential semiconductor components such as microprocessors, memory and data storage devices. Driven by growing demand for electronic devices and rapid development of new technologies, according to the Semiconductor Industry Association (SIA), the global semiconductor market is expected to reach US$600 billion in 2025, an increase of 14% over 2023.

The electronic circuit assembly and testing factory of Intel Products Vietnam Co., Ltd

Vietnam has attracted many semiconductor titans such as Intel, Samsung, Qualcomm, Infineon and Amkor with many investment projects for construction and expansion of manufacturing and assembly operations worth billions of US dollars. Semiconductor chip manufacturing is positioned as a new driving force to turn Vietnam into a prosperous country. By the end of 2024, Vietnam’s semiconductor industry is forecast to surpass US$6.16 billion, establishing the country as a key production hub for global semiconductor companies.

Intel, one of the biggest players in the semiconductor industry, has expanded the second phase of its US$4-billion chip testing factory in Ho Chi Minh City. Meanwhile, Samsung also invested in the largest product development center in Southeast Asia in Hanoi.

Several semiconductor companies from the Netherlands have also invested in Vietnam. BE Semiconductor Industries invested VND115 billion (US$4.9 million) in the first phase to hire factories for semiconductor manufacturing in the Ho Chi Minh City-based Saigon High-Tech Park. This project is expected to go into operation in the first quarter of 2025.

According to Mr. Thomas Rooney, Senior Manager of Industrial Services at Savills Vietnam, there are many reasons for Vietnam to become a top destination for semiconductor investors, thus bringing advantages of industrial real estate for this market.

Geographically, Vietnam is strategically located in Southeast Asia as it has easy access to major markets in the region and has favorable natural conditions with large reserves of rare earths - an important raw material in semiconductor manufacturing.

From a political perspective, Vietnam boasts a robust and stable political environment that garners significant interest from international investors. Furthermore, the Vietnamese Government is proactively fostering the growth of the semiconductor industry through the implementation of appealing tax incentives and supportive investment policies.

Opportunities for industrial real estate

Before the increased demand for semiconductor manufacturing investment in Vietnam by foreign corporations, Thomas Rooney said: “The investment demand for semiconductor manufacturing and assembling has driven an increase in the search for factories and industrial parks that meet their infrastructure and service requirements. Basic requirements include stable electricity supply, high-speed internet, and effective water systems, thus requiring improved facility quality and systems by investors in Vietnam.

The northern economic region is expected to continue to be a hotspot for industrial real estate amid the current wave of strong semiconductor investment. While industrial real estate tenants in southern provinces are involved in processing industries like rubber, plastic, food and beverage, northern provinces are destined to companies operating in high-value industries such as computers, electronics, and electrical products, he said. Therefore, developing semiconductor investment will boost industrial real estate growth in the north.

To attract capital into the semiconductor industry and industrial real estate, localities and enterprises must improve policy frameworks, infrastructure, and workforce to meet the stringent requirements of this specialized industry.

Notably, Vietnam’s infrastructure is still not fully developed, especially its power supply. During peak months, the grid fails to meet the demand. Meanwhile, the semiconductor industry is energy-intensive. Therefore, to meet the demand from the semiconductor industry, Vietnam needs to accelerate large-scale energy infrastructure projects.

Recently, the Prime Minister approved the National Power Development Plan for the 2021 - 2030 period, with a vision to 2050 (Power Plan 8), prioritizing investment projects and aiming for sustainable energy development. At the same time, Vietnam focuses on developing high-tech parks, particularly the National Innovation Center (NIC), to set the groundwork for foreign corporations to invest and manufacture in Vietnam.

Human resource investment

Regarding human resources, although Vietnam has a large working-age population of 52.4 million, aged from 15, in the quarter 1, 202 (according to the General Statistics Office), it lacks highly skilled engineers, who are necessary for developing the semiconductor industry, said Thomas. The lack of quality human resources will limit big investments from major corporations. Therefore, solving the workforce challenge will enhance Vietnam’s position as an investment destination, attracting major tech firms to invest in research, development and manufacturing in the country.

The Ministry of Planning and Investment lays special emphasis on developing Vietnam’s labor capacity to sharpen the country’s competitiveness in semiconductor manufacturing. Semiconductor manufacturing comprises two main areas: Research and development (R&D) and fabrication. Both processes have high labor demand. The government asked the ministry to collaborate with the Ministry of Information and Communications, the Ministry of Education and Training and relevant agencies to study and develop a human resources development project for the semiconductor industry, aiming to train and develop 50,000 workers for the sector by 2030.

The government and enterprises must cooperate closely to unlock existing potential, improve the investment climate, enhance infrastructure quality, and train human resources, thus creating favorable conditions for the sustainable development of the semiconductor industry and industrial real estate in Vietnam, Thomas added. With such efforts, Vietnam can become an important global semiconductor manufacturing hub, which supports the country’s economic development and uplifts its position in the global supply chain.

Huong Giang (Vietnam Business Forum)