World Courant
Ho Chi Minh, Vietnam – On a sunny afternoon in California in late September, Vietnamese Prime Minister Pham Minh Chinh toured Silicon Valley, the place he socialized with officers from semiconductor firms Synopsys and Nvidia.
Simply over a month earlier in Hanoi, Pham instructed 4 ministries to extend by tens of hundreds the variety of Vietnamese engineers who can work in semiconductor manufacturing.
The federal government’s efforts to make Vietnam a pretty possibility for chip investments continued within the new yr.
Science and Know-how Minister Huynh Thanh Dat instructed native media final month that authorities had launched tax breaks for high-value-added merchandise akin to semiconductors.
That mentioned the nation wished to welcome a “wave” of funding by working with different ministries and expertise firms to spice up analysis and appeal to expertise to the semiconductor sector.
Vietnam has set its sights on turning into a number one participant within the international provide chain for semiconductors – the wafer-thin built-in circuits which might be important to trendy expertise.
With Hanoi and a slew of nations agreeing on the necessity to de-risk China amid rising geopolitical tensions, the Southeast Asian nation seems to have momentum on its aspect in its bid to rival China’s dominance Taiwan and South Korea.
But Vietnam additionally faces obstacles, together with a restricted expert labor pool and power insecurity within the nation’s expertise manufacturing hub within the north.
The worldwide push to diversify semiconductor provide chains is consistent with Hanoi’s improvement targets, mentioned Le Hong Hiep, a senior fellow at Singapore-based ISEAS-Yusof Ishak Institute, who beforehand labored as an official at Vietnam’s Ministry of International Affairs .
“The semiconductor trade is seen as an important trade that may assist Vietnam remodel its economic system and switch Vietnam right into a developed, high-income economic system by 2045,” Hiep instructed Al Jazeera.
“By way of timing and strategic setting, it’s useful for Vietnam to develop the trade now.”
On the floor, Vietnam’s chip ambitions seem like flourishing amid an inflow of overseas capital.
Nvidia co-founder and CEO Jensen Huang has described Vietnam as the corporate’s ‘second dwelling’ (Tyrone Siu/Reuters)
Throughout a go to to Hanoi in early December, Nvidia co-founder and CEO Jensen Huang known as Vietnam the chip big’s “second dwelling,” vowing to broaden partnerships with native firms and arrange a base within the nation, in keeping with stories within the native media.
Nvidia, whose market capitalization surpassed $2 trillion final week, says it has invested $12 million within the nation thus far.
A spokesperson for Nvidia declined to touch upon Nvidia’s future actions in Vietnam when contacted by Al Jazeera.
Vietnam has about 5,000 engineers skilled in semiconductors, however will want as many as 20,000 within the subsequent 5 years, in keeping with the US-ASEAN Enterprise Council.
“When firms have a look at Vietnam, it appears excellent on paper, however after they truly must look by means of it to see if there may be sufficient electrical energy, what the infrastructure is like and, most significantly, what the workforce appears like… I do not assume Vietnam will turn into the producer it thinks it’s,” Zachary Abuza, a professor on the Nationwide Struggle Faculty in Washington, DC who focuses on Southeast Asia, instructed Al Jazeera.
Vietnamese authorities are conscious of the workforce shortages and are making an effort to coach extra engineers, mentioned Nguyen Thanh Yen, chief engineer on the Hanoi department of Korean chip design firm CoAsia SEMI.
“The federal government is now aggressively planning particular packages to extend the variety of semiconductor engineers,” Yen instructed Al Jazeera.
Semiconductors had been on the heart of the historic improve in relations between Vietnam and the US introduced in September, when the 2 international locations agreed to a complete strategic partnership – the best degree in Hanoi’s diplomatic hierarchy.
“We’re deepening our cooperation on vital and rising applied sciences, particularly round constructing a extra resilient semiconductor provide chain,” US President Joe Biden mentioned throughout a September 9 joint press convention with Communist Social gathering Normal Secretary Nguyen Phu Trong Social gathering of Vietnam. .
American chip firms seem like becoming a member of Washington’s agenda.
Arizona-based Amkor began operations at a $1.6 billion chip manufacturing unit in northern Vietnam final October, whereas Delaware-based Marvell introduced in Could it might set up a semiconductor design heart within the nation.
Samsung invests $3.3 billion in semiconductor part manufacturing in Vietnam (Kham/Reuters)
South Korean firms are additionally becoming a member of the push. Samsung, Vietnam’s largest investor, introduced in August 2022 that it might make investments $3.3 billion within the manufacturing of semiconductor elements within the nation.
Hana Micron Vina, which focuses on chip packaging and reminiscence merchandise, is constructing a second manufacturing unit in Vietnam and plans to speculate $1 billion within the nation by 2025, in keeping with a Nikkei Asia report.
Chip firms “are all competing for this very small, tight labor market,” Abuza mentioned. “(Vietnam) should enhance the variety of engineers by 5 occasions a yr for this.”
Others, like Yen, are optimistic about Vietnam’s skill to rise to the problem.
He mentioned the nation excels in math and science and that 20 technical universities are launching semiconductor coaching packages with the purpose of including 50,000 engineers to the workforce by 2030.
“Vietnam has the benefit of a younger and hungry workforce,” Yen mentioned. “The fields the place they will generate profits most simply are normally within the technical sectors. Semiconductors have gotten scorching now.”
Assist can also be coming from outdoors.
Throughout his go to to Vietnam, Biden introduced $2 million in seed funding for coaching in Vietnam’s semiconductor trade.
Europe might be the subsequent to get entangled, says Bruno Sivanandan, co-chair of the Digital Sector Committee of the European Chamber of Commerce in Vietnam.
“Partnerships might be created with academies in Europe to assist the coaching of Vietnamese employees,” Sivanandan instructed Al Jazeera. “Vietnam has such big potential that isn’t but being realized, so the large gamers are Vietnam.”
But Vietnam could not have the posh of time with regional challengers vying for funding.
ISEAS’s Hiep mentioned Malaysia and Singapore are formidable rivals and Indonesia and Thailand are additionally chasing the sector.
“Everyone seems to be searching for alternatives to determine their presence within the international chip provide chain,” Hiep mentioned. “It is a very, very aggressive trade.”
Vietnam depends closely on hydrodams for its electrical energy wants (Getty Pictures)
Power insecurity can also be a problem.
Throughout Vietnam’s hottest summer season but final yr, northern areas suffered intermittent energy outages. In early June, the climate was so sultry throughout an influence outage in Hanoi that some households took refuge in a mountainous cave close to the town heart.
For weeks, factories in industrial parks in northern Vietnam went darkish for hours within the afternoon.
“They needed to cease their actions as a result of there was no power for 4 to 5 hours in the midst of the day,” a Ho Chi Minh Metropolis-based particular person working within the power sector instructed Al Jazeera, asking that his identify be withheld to carry. he had not acquired permission from his firm to debate the topic.
“Samsung and different Korean factories – they had been in an enormous disaster as a result of they needed to utterly shut down their factories due to the shortage of electrical energy.”
Following the outages, authorities launched an investigation into EVN, the nation’s state-run electrical energy provider. Officers in the end disciplined 161 EVN personnel over the facility shortages.
Northern Vietnam depends closely on hydropower dams, which may dry up through the hottest months of the yr when demand is highest. The infrastructure is outdated and the nation “lacks the community capability and power sources to sort out the issue,” the power sector official mentioned.
“We should always have invested in energy transmission and power sources in North Vietnam a few years in the past, however EVN fell behind,” he mentioned.
“In northern Vietnam, (factories) will face an enormous power safety drawback.”
Power can also be a priority for European investments.
Below the phrases of the European Union’s commerce take care of Vietnam, European firms doing enterprise with the nation should adhere to more and more strict guidelines on carbon emissions, which might pose issues so long as Vietnam is closely depending on coal.
“To do enterprise in Europe it’s a must to meet the necessities relating to CO2 emissions,” says Sivanandan. “If we apply this to the semiconductor trade, will probably be a barrier.”
Abuza mentioned there’s a vital hole between Vietnam’s potential and the truth on the bottom.
“These chip factories and server farms and all of the high-tech issues that Vietnam needs to do depend upon very steady electrical energy, however they simply do not have it,” he mentioned. “Vietnam has nice potential for buyers, however there may be a lot they’re struggling to unravel.”
As Vietnam tries to turn into chip chief, power and labor points stand in the way in which | Know-how
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