Unfazed by high costs, Vietnam plans to build semiconductor plant

HANOI, Vietnam: Despite warnings from U.S. industry officials about high costs, Vietnam is holding discussions with chip companies on possibly building its first chipmaking plant, also known as a “fab.”

The Southeast Asian electronics manufacturing hub is drafting a strategy to attract more semiconductor investment, including from foundries which focus on manufacturing chips.

It already hosts the largest semiconductor packaging and testing plant in the world of U.S. giant Intel and several chip designing software firms.

In an interview with Reuters, Vu Tu Thanh, head of the Vietnam office of the U.S.-ASEAN Business Council, said that meetings with half a dozen U.S. chip firms took place in recent weeks, including with fab operators.

The meetings came after the advancement of official relations between Vietnam and its former enemy in September, when President Joe Biden visited Hanoi.

The White House said Vietnam is potentially a “critical player” in semiconductor global supply chains.

This week, the Vietnamese government said it aimed to build the country’s first fab by the end of this decade, and chip companies would benefit from “the highest incentives available in Vietnam.”

Hung Nguyen, senior program manager on supply chains at Hanoi’s University Vietnam, told Reuters that the strategy could also support local firms, such as state-owned tech company Viettel, to build fabs with imported equipment.

However, Robert Li, Vice President of U.S. Synopsys, a leading chip design firm with operations in Vietnam, urged the government in Hanoi to “think twice” before handing out subsidies to build fabs.

Speaking at “Vietnam Semiconductor Summit” in Hanoi over the weekend, he said building a foundry could cost as much as $50 billion. It would mean competing for subsidies with China, the U.S., South Korea and the European Union, which have each announced spending plans on chips between $50 and $150 billion.

At the same conference, John Neuffer, President of the U.S. Semiconductor Industry Association, said the government should focus on chip sectors where Vietnam was already strong, such as assembling, packaging, and testing.