Vietnam is a viable semiconductor chip partner for the US, which is looking for alternatives to China (40%) and Taiwan (27%). On September 10, US President Joe Biden will visit Vietnam to boost bilateral commerce, focusing on the semiconductor industry.
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US Partnership with Vietnam as Semiconductor Chip Partner
The US is eager to “friendshore” chip industry components to Vietnam. Interestingly, Vietnam is still dominated by the communist party. Vietnam took its route and moved closer to the US following the 1960s and 1970s war, which cost both sides dearly. Since Vietnam has been at odds with its other communist neighbor, China, Vietnam-US relations have improved. The 1978 Vietnam-China war broke them apart. China has supported North Vietnam and its communist government against South Vietnam and the US till then. Vietnam joined ASEAN, an economic bloc that supported US policy. The US-Vietnam relationship has improved during the 1990s.
Vietnam is in a tough place despite the US’s desire to make it a strategic semiconductor chip partner and break the Chinese supply chain monopoly of semiconductor chips. Of course, the Chinese and Vietnam dominate chip assembly backends. The US is eager to teach Vietnam semiconductor chip manufacturing methods, but Vietnam lacks competent chip engineers. The country has 5,000–6,000 field engineers. Five years from now, 20,000 will be needed, and 50,000 by the next decade. It will be hard for Vietnam to meet expanding demand.
Vietnam’s Resources for Semiconductor Chip is Below to Produce an Expected Output of a Multi-Billion-Dollar Investment
The semiconductor chip manufacturing industry’s rare minerals in Vietnam fascinate the US. “The number of hardware engineers is way below what is needed to support multi-billion-dollar investments,” told US-Asean Business Council Vietnam office head Vu Tu Thanh. Half a billion dollars in US chip exports from Vietnam. US Chips Act and other private investments from American chip designers might invest $500 million in China. The US’s desire to invest in Vietnam to break the Chinese monopoly is part of its Indo-Pacific strategy to contain China, though not overtly stated. Vietnam’s open-ended economy and 100 million people may be a solid gamble. This country would not get swallowed up by Chinese trade like many of its neighbors. Indonesia, Malaysia, Thailand, Singapore, and Myanmar are influenced by China, but Vietnam is not for political and cultural reasons.
The US is also courting India to build semiconductor chip factories. India consumes a lot of semiconductors due to its booming digital and electronics sector. The US needs supply bases in offshore countries. Compared to India, Vietnam’s production costs are competitive. Despite its current disadvantages, the US appears to want to drive Vietnam into semiconductor chip manufacturing.
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