Vietnam has a rapidly developing semiconductor ecosystem and a window to elevate its standing in the global supply chain.
In their shared announcement about the US-Vietnam Comprehensive Strategic Partnership, the two countries noted Vietnam’s sizable potential to become a key nation in the semiconductor industry and “are supportive of the rapid growth of the semiconductor ecosystem in Vietnam.”
The announcement also mentioned initiatives to develop human resources in the semiconductor industry, with the US providing a seed fund of US$2 million first and investments from the Vietnamese Government and the private sector in the future.
These are seen as Vietnam making new moves in its journey to join an industry worth hundreds of billions of dollars that impacts all areas globally.
According to data in February from the US Census Bureau, chip imports from Vietnam jumped by 75% during the month to $562.5 million from $321.7 million a year earlier to account for an 11.6% market share.
Problems with Vietnam’s semiconductor industry and its workforce
According to analyst Ivan Lam of Counterpoint Research, Vietnam lacks the ability to indigenously make semiconductors. After a few ups and downs with the growth of the chip industry including overseas investments, a recovery was followed in 2013-14 local firms such as Viettel and FPT began to enter the industry.
Vietnam now has more than 5,500 chip design engineers, according to the Vietnam Microchip Community which is too little for this multibillion-dollar industry.
Vietnam has two options to grow: expand the production sector or improve the skills and value in the design and packaging phase. According to experts, Vietnam is opting for the latter.
At a meeting with two national universities on September 6,minister of information and communications Nguyen Manh Hung said Vietnam possesses advantages in chip designing and would prioritise it.
The most important infrastructure for this, and one that requires government investment, is a chain of state-of-the-art research facilities, he added.
Nguyen Thanh Yen, administrator of the Vietnam Microchip Community, said he has observed the Vietnamese semiconductor market for 20 years and developing design expertise is the way to go.
“Five thousand engineers is neither a large number nor small, and they play an important role in training the next generations of engineers. In the chip industry, design engineers are the most crucial since they know every part of the design. If Vietnam focuses on developing engineers, we will see great results in the next five to 10 years,” he said.
At the Vietnam — US Summit on Innovation and Investment held on September 11 Truong Gia Binh, chairman of FPT Corporation, exhorted the government to invest in training 30,000-50,000 semiconductor experts.
FPT University announced it has established a semiconductors and circuits department to address the country’s shortage of highly skilled workers.
It will take in its first students in 2024 and offer them comprehensive training in IC design, and carry out research into semiconductors.
Vietnamese companies can pursue a fabless manufacturing model like Nvidia, ARM and Qualcomm, designing chips and conducting business but not manufacturing them. FPT Semiconductor does this in Vietnam.
The production process will require huge investments since the country barely has the ecosystem for it.
Workforce challenges
Experts said the shortage of personnel poses a hurdle to Vietnam’s ambitions to raise the value of its chip supply chain.
Also at the September 6 meeting with the universities, Hung said the semiconductor industry would need 10,000 engineers produced every year, but the current rate is less than 20% of that.
In fact, the number of engineers has only been growing by around 500 a year, according to a report by the Vietnam Microchip Community.
Most of Vietnam’s semiconductor engineers are currently working for foreign firms.
“They include highly skilled ones, but typically in a certain phase or specific process, and few at the chief engineer level. Our position now is that of a supplier of people who can manage a particular step in the chip design process and not finalize designs or market chips,” Yen said.
“Besides, the industry is characteristically “conservative” and prioritises experience,” he said.
In IT, faulty software could be quickly amended and patched, but faulty chips could cost millions of dollars and years to repair, he explained.
So fresh engineering graduates are normally not entrusted with key tasks, he said.
“The shortage in the workforce is not due to a lack of new people but due to not yet discovering a way for firms to use fresh graduates.”
Experts also called on the government to offer income tax breaks to lure back Vietnamese specialists working abroad.
In the next five to seven years Vietnam needs to have local fabless chip manufacturers with a solid footing in the market, they said.
Ivan Lam said Vietnam lags other Asian countries like Singapore and Malaysia though companies like Viettel and FPT have developed their own R&D and chipsets.
“Consistent investment in education, industry support, international cooperation, and IP accumulation is vital to overcoming this hurdle. With efforts by the government, participation by local businesses and cooperation from global chip makers, the country’s semiconductor industry has the potential for long-term growth,” he concluded.
