Việt Nam's potential in the semiconductor industry

April 12, 2024 - 07:48
Professor Trần Xuân Tú, Director of the Institute of Information Technology under Vietnam National University, talks with online newspaper about the challenges and opportunities the semiconductor industry faces, shedding light on Việt Nam's potential role in this field.


Professor Trần Xuân Tú, Director of the Institute of Information Technology under Vietnam National University. — Photo

Professor Trần Xuân Tú, Director of the Institute of Information Technology under Vietnam National University, talks with online newspaper about the challenges and opportunities the semiconductor industry faces, shedding light on Việt Nam's potential role in this field.

Only a few countries in the world hold the key semiconductor technologies. What makes these technologies so difficult to access, and are there still opportunities for countries like Việt Nam to enter this field?

In the semiconductor industry, no single country can do it all. It's a supply chain, a value chain. Each country will choose its own area of advantage to participate in certain stages. Việt Nam has traditionally been known for its cost-effective labour and abundant workforce. Typically, high-tech companies will deploy assembly plants, packaging in Việt Nam.

With the right investment in skills development and infrastructure, we can also become a hub for chip design. On another front, Việt Nam stands out in terms of its performance in general education and on both national and international examinations.

The semiconductor industry is challenging because the manufacturing process relies heavily on modern technology, with machines requiring high precision. Investing in a large-scale industrial factory could require around US$15 billion. However, aiming for a smaller scale would make competition exceedingly tough due to the high costs involved.

Furthermore, our lack of manufacturing experience makes it difficult to gain the trust of customers to place orders. Chips must undergo rigorous quality checks and meet strict requirements to attract customers.

During the 1980s, Việt Nam embarked on its semiconductor journey with the establishment of the Z181 factory. Fifty years later, we are attempting to re-enter the field once again. Is this interval too lengthy?

Việt Nam had semiconductor manufacturing plants in the 1980s, producing very basic components. During that time, we exported those components abroad.

Now, we are re-engaging in this sector. Whether this endeavour will be a long or short-term success depends on continuous investment in science and technology, research and development to generate new technologies for the future.

Currently, we have suitable human resources in terms of age and background. However, in terms of knowledge, skills and qualifications, we have not fully met all the requirements of the semiconductor industry.

In my opinion, the government needs a specific strategy to further support universities and research institutes in investing more heavily in training and research.

We need mechanisms to attract talented individuals to participate in this field. It's an interdisciplinary domain that demands a strong foundation of thinking, coupled with perseverance and passion, for individuals to successfully engage in it.

Which segments of the global semiconductor supply chain offer opportunities for Vietnamese companies to participate? Is it in design, packaging or the manufacturing of "Made in Vietnam" chips?

The semiconductor industry comprises several key stages, including design, manufacturing, packaging, and testing. Additional aspects are involved in application development based on the circuits produced.

Within this industry, design stands out as the most profitable segment, contributing approximately 52-55 per cent of the overall cost. Manufacturing follows closely, accounting for about 24-25 per cent, while the remaining share is allocated to packaging and testing.

Presently, foreign direct investment (FDI) companies operating in Việt Nam predominantly focus on packaging and testing operations. However, for a sustainable long-term strategy, it's imperative for us to deepen our involvement in the design phase, which offers the highest value.

Việt Nam should prioritise investments in packaging and testing to fulfil the requirements of FDI enterprises. Simultaneously, efforts should be made to cultivate human resources for the design phase, fostering the establishment of startups, design centres and firms. Initially, designs may be tailored to meet foreign orders, paving the way for the development of indigenous products.

In terms of manufacturing technology, which is intricately linked with design, Việt Nam should target mid-range technologies. These technologies align well with applications deployed within the Vietnamese market. However, venturing into newer, advanced technologies poses significant challenges and is constrained by factors such as manufacturing facilities and support tools.


Vietnamese individuals can participate in various stages of the semiconductor industry, including chip design. — Photo courtesy of the Institute of Information Technology

What role does the government need to play in developing the semiconductor industry?

The Ministry of Information and Communications and the Ministry of Science and Technology need specific programmes to support research and development projects in the field of microelectronics. To allocate resources strategically, it's imperative to hone in on specific pathways and applications within microelectronics, such as AI chips, IoT chips, telecommunications chips, and 5G and 6G technologies.

The Ministry of Planning and Investment ought to funnel investments into collaborative laboratories embedded within universities. These labs should be forged through partnerships between academia and industry players.

This is to avoid state investment regulations for businesses related to the WTO.

The symbiotic relationship between businesses and universities, supported by these integrated laboratories, will present higher education institutions with real-world business challenges. As a result, graduating students will be equipped to seamlessly transition into the workforce.

This educational model not only addresses the skill demands of businesses but also enables enterprises to tap into the intellectual wealth harboured within universities. Harnessing this knowledge base, particularly the insights unearthed through academic research, will fortify business operations. It's imperative that we cultivate robust research and training infrastructures to elevate our universities to the leading edge of innovation.

What guidance do you offer to young individuals and startups in Việt Nam venturing into the semiconductor industry?

I believe that for startups in the semiconductor industry, it's crucial to find customers. To achieve that, we need to establish a certain level of capability.

The semiconductor landscape isn't just a single sector; it's a dynamic interplay of industries, applications and hurdles. It's imperative that we fortify our strengths to acquire capabilities, thereby seizing market opportunities, attracting customers and steadily expanding.

For startups, the path to success lies in scaling up to become robust industrial players.

I see the National Innovation Centre (NIC) under the Ministry of Planning and Investment playing a pivotal role in fostering connections. The NIC, in collaboration with other ministries, should showcase its bridging role. Moreover, by facilitating access to design software tools or establishing incubation funds, the NIC can empower businesses.

Recently, the NIC launched the Việt Nam Innovation Challenge Programme 2024. This initiative seeks to recognise and elevate AI solutions and applications, fostering business development and productivity enhancement.

Businesses should eagerly embrace such programs to foster collaboration and cultivate a thriving ecosystem. The semiconductor industry is a collaborative value chain. Alone, we may falter, but together, with NIC's guidance, we can construct a robust ecosystem for semiconductor enterprises. — VNS