The United States is helping Vietnam build a chip industry.
On February 20, President Donald Trump announced that he would remove Vietnam from the Strategic Export Control List, which previously prohibited Vietnam from purchasing advanced technology from U.S. companies. Trump also reiterated Washington's commitment to a "strong, independent, self-reliant, and prosperous" Vietnam.
Vietnam - A US Chip Industry Partner
Vietnam has been on the restricted list since the Cold War. Removal from the list would allow Vietnam to shift from chip assembly and packaging to chip manufacturing, thus repositioning it as a chip industry partner of the United States.
"For the semiconductor supply chain, this decision marks Vietnam's transformation from a back-end assembly hub to an upstream manufacturing and design partner," Sujai Shivakumar, director of the Revitalizing American Innovation program at the Center for Strategic and International Studies (CSIS), a Washington-based think tank, told The Rest of the World. "The U.S. is clearing obstacles for Hanoi to access the high-end U.S. tools and software necessary for advanced chip manufacturing."
The Biden administration upgraded U.S.-Vietnam relations to a comprehensive strategic partnership in 2023. Trump continued Biden's policy.
The U.S. is clearing obstacles for Hanoi to access high-end U.S. tools.
"Every time I come to Vietnam, I am impressed by the progress you have made," John Newell, president of the Washington-based Semiconductor Industry Association, told Vietnamese officials during a chip conference in Hanoi in January. He cited Semiconductor Industry Association member companies such as Intel, Samsung, Qualcomm, Amkor, and Marvell, which already have operations in Vietnam.
Vietnam's top leader flew to Washington on February 20 to ensure that President Trump would commit to removing Vietnam from the export control list. Five weeks earlier, he had attended the groundbreaking ceremony for Vietnam's first domestically manufactured chip factory in Hanoi.
Operated by state-owned giant Viettel, the factory is scheduled to begin trial production by the end of 2027, producing 32-nanometer chips widely used in automobiles, telecommunications networks, and industrial equipment. Instead of blindly pursuing the currently most advanced 2-nanometer or 3-nanometer chips, Vietnam is focused on building its chip industry from scratch.
Viettel factory in Vietnam
The closure of the Viettel factory is part of a larger operation. On January 15, Vietnamese Prime Minister Pham Minh Chinh met with Edward Steephout, Senior Vice President of ASML, a Dutch company that manufactures machines used to manufacture advanced chips. This meeting was seen as a clear signal from Hanoi, given the US's pressure on the Netherlands to stop selling ASML's most powerful equipment to China.
Two days later, Finance Minister Nguyen Van Thang met again with the same ASML delegation to discuss establishing a training center and a formal branch of the company in Vietnam. The speed of the process, from groundbreaking to the meeting with ASML and then to talks at the White House, suggests a carefully orchestrated operation aimed at maximizing Surin's influence in Washington.
Vietnam currently has approximately 7,000 chip engineers, and the government aims to increase that number to 50,000 by 2030. Qualcomm has already opened its third-largest global R&D center in Vietnam, and Amkor has invested $1.6 billion in Vietnam to build its largest packaging plant globally. Analysts predict that Vietnam's share of the global chip packaging market will grow from 1% in 2022 to nearly 9% by 2032.
While chip-related cooperation was one of the many agreements reached during Doolittle's trip to Washington, it is arguably the most far-reaching. Building a chip industry requires decades of investment, training, and infrastructure development.
For the United States, the trip to Vietnam was about developing alternatives; for Vietnam, it was about securing a place in one of the world's most valuable industries.
Source: Compiled from restofworld
