Vietnam has announced it will introduce a series of tax incentives for semiconductor companies amidst a wider semiconductor strategy for the country today (12 February).
A science fund will be established to raise money for Vietnam’s domestic semiconductor industry. Research collaborations between the country and private companies will also be encouraged via funding.
“Vietnam’s semiconductor industry has a low localization rate, research and development activities are not synchronised and high-quality human resources in the field of semiconductors is still limited,” stated Huynh Thanh Dat, Vietnam’s Minister of Science and Technology.
Dat did not specify exactly what the tax incentives would be but stated that they would be intended to encourage outside semiconductor talent to work in Vietnam.
Vietnam is looking to become a hotbed for semiconductor manufacturing following rising tensions between the US and China.
US President Joe Biden previously visited Vietnam in September 2023 where a partnership between the US and Vietnam was announced to create cooperation between the two countries’ tech sectors.
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More recently, several unnamed US companies expressed interest in investing as much as $8bn into Vietnam chip and clean energy industries if they received regulatory backing.
Semiconductor production is currently dominated by the Asia-Pacific region, accounting for around 60% of the semiconductor market’s revenue in 2022 totalling $371bn according to research and analysis company GlobalData in its executive briefing on AI.
Taiwan, Japan and South Korea have historically dominated semiconductor production, however as both the US and China publish tighter regulations on each other’s tech companies, these countries existing production lines could struggle to continue to provide hardware to AI companies.
Vietnam’s general technological landscape has received a lot of guidance from its government. In 2022, Vietnam’s Ministry of Information and Communication unveiled plans to secure its national digital infrastructure and as a result the country is now already ahead of China in terms of population of internet users and mobile penetration rate according to GlobalData’s PESTLE report into Vietnam.
Given the US’ visit to Vietnam and its companies interest in the country, Vietnam’s prospect as a “friendshoring” manufacturing destination could lead its tech industry to grow in 2024.