Vietnam’s semiconductor industry is facing major challenges in workforce, infrastructure, technology, policy, and investment. Learn more about the barriers shaping semiconductor manufacturing in Vietnam.
Semiconductor Manufacturing in Vietnam: Current Context
The global semiconductor industry is undergoing a major transformation as supply chains diversify away from traditional hubs like China and Taiwan. Vietnam has recently emerged as a potential player in assembly, testing, and packaging (OSAT/ATP), attracting attention from investors seeking resilience and new markets. Yet despite strong government support and growing international interest, semiconductor manufacturing in Vietnam still faces several critical challenges that must be overcome before it can reach global competitiveness.
Workforce Challenges in Vietnam’s Semiconductor Industry
One of the most pressing barriers is the shortage of skilled engineers. Vietnam currently has only a few thousand professionals working in semiconductor-related fields, while the industry is projected to require more than 50,000 engineers by 2030. Most of the existing workforce has experience in electronics assembly rather than advanced semiconductor roles such as chip design, wafer fabrication, or lithography. The lack of high-level expertise in these areas slows Vietnam’s ability to move up the value chain. To address this, the government and universities have begun to expand training programs, working in collaboration with global technology partners, but bridging the talent gap will take time.
Infrastructure and Energy Constraints
Semiconductor fabs require an ecosystem of highly reliable infrastructure, and this remains a weak point for Vietnam. Power supply stability is a concern, with seasonal blackouts and grid strain creating potential risks for uninterrupted production. Supporting utilities such as cleanroom environments, ultra-pure water, and specialty gas systems are still underdeveloped across many industrial zones. Logistics also pose challenges, as Vietnam continues to rely heavily on imported materials and equipment. These dependencies leave the semiconductor supply chain vulnerable to global disruptions, adding to production costs and uncertainty.
Technology and R&D Gap
At present, Vietnam’s semiconductor industry is concentrated in lower-value segments such as packaging and testing. The country has limited capability in wafer fabrication and lacks access to advanced lithography technologies like EUV, which are critical for next-generation chips. Compared to established hubs in Taiwan, Korea, and the US, Vietnam’s technology gap remains significant. The high cost of semiconductor equipment, combined with barriers to intellectual property licensing and limited domestic R&D, makes it difficult for local companies to upgrade their capabilities. Without stronger investment in innovation and technology transfer, Vietnam risks remaining stuck in low-margin areas of the value chain.
Policy and Investment Incentives
Vietnam has officially recognized semiconductors as a national priority through initiatives such as Decision 130/QĐ-TTg. However, its regulatory framework still lacks the consistency and competitiveness seen in other countries. Global corporations, including Intel and LG Chem, have previously reconsidered expanding in Vietnam due to insufficient incentives, especially when compared to Malaysia or India. Land-use policies, tax incentives, and infrastructure subsidies remain fragmented, creating uncertainty for investors. For Vietnam to secure long-term semiconductor investment, it will need to strengthen its legal frameworks and ensure policies are clear, transparent, and competitive on a global scale.
Global Competition
Vietnam is entering an industry marked by intense international competition. Countries like Malaysia, India, and South Korea already have well-established semiconductor ecosystems and long-standing relationships with multinational companies. At the same time, Vietnam’s strategic position between the US and China offers both opportunities and risks, as geopolitical tensions may impact trade flows, technology access, and investment choices. Global sustainability standards, including requirements for clean energy use, water management, and carbon neutrality, are also becoming more stringent. If Vietnam cannot meet these requirements, it may lose attractiveness to environmentally conscious investors.
Financial and Capital Intensity
Finally, the financial burden of building semiconductor fabs is immense. Setting up a state-of-the-art fabrication facility requires billions of dollars in capital investment, along with ongoing costs for equipment maintenance and upgrades. Few Vietnamese firms have the financial strength to make such commitments independently, leaving the sector heavily reliant on foreign direct investment. While FDI provides opportunities, it also creates vulnerability if investor priorities shift. To build resilience, Vietnam must find ways to balance foreign investment with stronger domestic capacity and long-term funding mechanisms.
Conclusion: Building a Competitive Vietnam Semiconductor Ecosystem
Vietnam holds strong potential to become a critical part of the global semiconductor supply chain, but its ambitions are tempered by six key challenges: workforce shortages, infrastructure gaps, technological limitations, policy inconsistencies, geopolitical risks, and financial intensity. Overcoming these barriers will require strategic investment in talent pipelines, stronger government incentives, infrastructure upgrades, and sustainable policies that encourage long-term collaboration with international partners. With decisive action, Vietnam can move beyond being a packaging hub to becoming a more integrated and competitive player in the semiconductor industry.
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