Despite warnings about high costs from U.S. industry authorities, two business executives said that Vietnam is in talks with semiconductor giants to increase investment in the country and potentially establish its first chipmaking plant, or fab.
The largest semiconductor packaging and testing plant in the world, owned by American behemoth Intel (INTC.O), is already located in Southeast Asia, which is also home to multiple software firms that create chips. It is developing a plan to draw in additional funding for semiconductors, particularly from foundries that specialise in chip production.
Vu Tu Thanh, who is in charge of the US-ASEAN Business Council’s Vietnam office, told Reuters that meetings with six American semiconductor companies have taken place recently, including ones with fab operators. The conversations were still in the early stages, so he declined to name the firms.
Speaking anonymously to the media, a chip executive revealed that discussions with possible investors included Taiwan’s PSMC and U.S. contract manufacturer GlobalFoundries (GFS.O).
The executive stated that the goal was to construct Vietnam’s first factory, probably for less sophisticated semiconductors used in automobiles or for telecom purposes.
The conversations came after President Joe Biden visited Hanoi in September and the White House labelled the former adversary as possibly a “critical player” in global supply chains for semiconductors, marking a historic improvement in formal ties between the United States and Vietnam.
At the president’s invitation, GlobalFoundries attended a closed-door business gathering during Biden’s visit, according to the company. However, no new investment interest in Vietnam has been shown as of yet, according to a person with knowledge of the situation.
A GlobalFoundries representative responded, “We do not comment on market rumours,” when questioned about further interactions. A remark was requested, but PSMC did not respond.
Meetings, according to industry representatives, are mostly intended to gauge interest and talk about prospective incentives and subsidies, such as those related to infrastructure, electricity supply, and the availability of skilled labour.
The Vietnamese government declared on Monday that chip makers will receive “the highest incentives available in Vietnam” and that it hopes to open its first factory before the end of this decade.
According to Hung Nguyen, senior program manager for supply chains at University Vietnam in Hanoi, it might also help regional businesses like the government-owned tech company Viettel (CTR.HM) construct fabs using imported machinery.
A request for comments from Viettel was not answered.
But vice president Robert Li of U.S. Synopsys (SNPS.O), a well-known chip design company with operations in Vietnam, advised the government to “think twice” before providing funding for the construction of fabs.
Speaking on Sunday at the “Vietnam Semiconductor Summit” in Hanoi, he said that constructing a foundry could cost as much as $50 billion and would require bidding on subsidies against the likes of China, the United States, South Korea, and the European Union, each of which has announced plans to spend $50 to $150 billion on chips.
During the same conference, John Neuffer, the President of the U.S. Semiconductor Industry Association, suggested that the government concentrate on chip industries like testing, assembly, and packaging where Vietnam was already strong.