Vietnam is experiencing a rise in foreign companies setting up chip testing and packaging facilities as industrial activity moves from China. This shift is driven by ongoing trade tensions between the US and China, which may escalate further. The semiconductor back-end manufacturing sector, which is less capital-intensive than front-end chipmaking, is currently dominated by China and Taiwan. Vietnam is one of the fastest-growing countries in this $95 billion segment. Hana Micron's vice president for Vietnam, Cho Hyung Rae, stated that the company is expanding in Vietnam to meet industrial clients' requests to move some production capacity from China. The South Korean company is investing approximately 1.3 trillion won ($930.49 million) by 2026 to enhance packaging operations for legacy memory chips. US-based Amkor Technology announced a $1.6 billion investment last year to build a massive new facility in Vietnam, which it claims will be its most advanced for next-generation chip packaging. Sources suggest that some equipment for this plant has been transferred from Amkor's existing factories in China. Intel, which already operates its largest back-end chip factory globally in Vietnam, also participated in Vietnam's first international semiconductor exhibition near Hanoi last week. The Biden administration's support for Vietnam's chip industry growth aligns with its efforts to reduce dependence on China for critical technology components. This trend is expected to continue regardless of potential future political developments in the US. Vietnam is projected to capture a significant share of the global chip assembling, testing, and packaging (ATP) market. According to a May report by the US Semiconductor Industry Association and Boston Consulting Group, Vietnam's share is expected to jump from just one per cent in 2022 to 8-9 per cent by 2032. Local Vietnamese companies are also contributing to this growth. FPT, a Vietnamese technology firm, is constructing a testing facility near Hanoi with plans to triple its capacity by 2026. Additionally, Vietnamese investment firm Sovico Group is seeking foreign partners for an ATP facility in Danang. Vietnam's ambitions extend beyond back-end manufacturing. State-owned Viettel is planning to build the country's first chip foundry, aiming to meet the government's goal of having at least one operational fabrication plant by 2030. Attribution: Reuters Subediting: M. S. Salama
