Taiwan's semiconductor companies eye Vietnam for manufacturing, but obstacles persist

A symposium on cyclical economics and the digital economy took place at the National Development Council in Taiwan on June 19

Vietnam's semiconductor industry is making progress in establishing domestic chip manufacturing facilities. However, local businesses still face obstacles when trying to fully participate in the production chain. There is limited involvement in assembly processes and the core technologies remain in foreign hands.

Taiwanese companies have been relocating manufacturing bases to Vietnam, viewing it as a safe destination for foreign direct investment amidst the ongoing trade war.

According to local media VietnamPlus, Shien Quey Kao, deputy chair of Taiwan's National Development Council, suggests that Taiwanese groups are carefully considering options before making concrete decisions. Factors such as relevant technologies and high-quality human resources are vital for establishing manufacturing plants.

Supportive policies and incentives from the host country's government also play a role in the decision-making process.

Vietnam's semiconductor industry is rapidly growing as companies affected by supply chain disruptions invest in the country. To ensure long-term growth, Vietnam needs to adjust its policy framework, expand vocational training in high-tech sectors, and support domestic companies.

Currently, Vietnam's chip exports are mainly from foreign-invested enterprises, while the country's role in the supply chain is primarily assembly, testing, and packaging.

Domestic semiconductor production is yet to be realised. Collaboration with Taiwan in terms of chip production would require talent exchanges, with Taiwan welcoming Vietnamese students to study semiconductor-related fields.

Vietnam's large student population studying in Taiwan provides a foundation for this to support Vietnam-Taiwan chip production cooperation. Vietnam leads other Asia-Pacific countries in terms of the number of students studying abroad in Taiwan.

Taiwanese companies have already established chip manufacturing facilities abroad, including in the United States and Japan, with more plants likely in Germany.

The development of Vietnam's semiconductor industry holds promise, but further adjustments to policies, investment in human resources, and collaboration with international partners are necessary for long-term growth and integration into the global chip production landscape.

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