U.S. plans to invest CHIPS Act money in Vietnamese semiconductor industry

Intel
(Image credit: Intel)

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.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. 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.

  • usertests
    Seems like a good idea. I suppose this is meant to prepare the way for more companies to set up there.
    Reply
  • TechLurker
    With Japan and Vietnam also having rather close ties, this move will also help strengthen Vietnam's high-end manufacturing too.
    Reply
  • kep55
    Admin said:
    The U.S. may make significant investments in Vietnam to boost its semiconductor sector.

    U.S. plans to invest CHIPS Act money in Vietnamese semiconductor industry : Read more
    Having missed the war that was supposed to stop the communist domino effect (thank you, President Nixon), all I can say is "Con chuột gầm lên."
    Reply
  • accolite
    Great.... like China was not a good lesson.
    How about we diversify in countries that are not communist...

    Better yet how about we first re-establish chip industry at home, before we even think about others...
    Reply
  • wbfox
    Hey China, this is how much everyone hates you because of the things you do. Good morning Vietnam!
    Reply
  • vituminx
    accolite said:
    Great.... like China was not a good lesson.
    How about we diversify in countries that are not communist...

    Better yet how about we first re-establish chip industry at home, before we even think about others...
    This is already happening with TSMC's investment in the Arizona fab -- but it's hitting headwinds with labor unions and costs much higher than those in Asia. If you're willing to spend twice the price for your electronics, it can be made in America.
    Reply
  • gg83
    Why are we investing in another communist country? Oh, because they can pay their workers whatever they want.
    Reply
  • Co BIY
    This is because the people of Vietnam have made great strides in throwing off their authoritarian rulers and joined the free nations of the world in advancing human dignity ...

    Right ... ?

    https://freedomhouse.org/country/vietnam/freedom-world/2022
    Reply
  • Co BIY
    gg83 said:
    Why are we investing in another communist country? Oh, because they can pay their workers whatever they want.

    Multinationals can pay the workers what they want and count on government coercion to force the workers to submit.

    I believe the most dangerous aspect of the CCP's is not their aggressive militarism or mercantilist economic bullying, it's the attractive example they present to Global Elites of how a modern society can be ordered without freedom for the great majority of people for the exclusive benefit of the ruling classes. The Davos crowd are always giddy with the possibility of implementing CCP policies (likely with "Western Characteristics") in their own countries.
    Reply
  • vanadiel007
    "reducing dependency on China and instead become dependent on Vietnam."
    Fixed it for you.

    It's pretty sad to see taxpayers money flow to foreign countries, because businesses outsource to avoid taxation and reduce labor costs. All to increase their shareholders profits.

    It's really the world upside down if you ask me. That money and more should be flowing to US facilities to increase chip production in the US. Once you do that you never have to worry about any type of influence another country would have on the chip market, because you would not be dependent on them for chips.
    Reply