U.S. plans to invest CHIPS Act money in Vietnamese semiconductor industry
Taking advantage of a younger workforce and reducing dependency on China
U.S. undersecretary of state for economic growth Jose Fernandez announced that the U.S., under the CHIPS and Science Act, will invest in Vietnam's semiconductor industry in a bid to diversify supply chains and reduce dependency on China. This move appears to be part of a larger $500 million global initiative to enhance semiconductor training, cybersecurity, and business climates in seven targeted countries, including Vietnam, according to a report from Nikkei.
Vietnam is not known for its chip manufacturing capabilities, as it does not have any — but Intel's test and assembly facility near Ho Chi Minh City is vital to its worldwide supply chain. Furthermore, there are many companies that assemble electronics in Vietnam, so the country indeed consumes a lot of chips and already plays an important role in the global electronics supply chain. Over time, Vietnam could develop its own semiconductor prowess, Fernandez believes. This sentiment is shared by Nvidia.
"We went through a list of countries that we felt had the potential to benefit from our [CHIPS Act] support, and Vietnam was one of the first countries that we thought about," Fernandez told Nikkei.
Fernandez also highlighted Vietnam's potential as a manufacturing hub — HP is relocating its PC assembly to Vietnam, Mexico and Thailand — noting its young workforce as a key asset. He encouraged taking advantage of this, as it may not be a perpetual opportunity.
Vietnam has significant reserves of rare earth metals; the country is ranked second globally after China, according to U.S. Geological Survey data cited by Nikkei. This fact also play a crucial role in U.S. strategy to counter Chinese dominance in the rare earth market. The U.S. aims to rebuild its presence on the market of rare earth metals, by resurrecting its own mines and offering support to Vietnam for surveying its mineral deposits.
Fernandez emphasized the urgency for Vietnam to attract investments in key industries such as clean energy and minerals crucial for electric vehicles and batteries. This initiative aligns with Vietnam's efforts to be designated as a market economy by the U.S., a status that would lead to tariff reductions and, ultimately, investments. Challenges in obtaining permits are currently impeding potential U.S. investments, however, which could amount to as much as $8 billion — including investments from chip companies committed to using only clean power.
The U.S. will base its foreign aid decisions under the CHIPS Act on recommendations from the Organisation for Economic Co-operation and Development (OECD). These recommendations, due in February, will focus on identifying what Vietnam needs to develop its semiconductor industry, particularly in areas such as training.
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Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.