Why Vietnam Spent Billions Just To Make Chips Instead of Importing Them? | Lê Quang Đạm | EP 4

Key Concepts

• Semiconductor: A material with electrical conductivity between a conductor and an insulator, capable of both transmitting and blocking electricity.
• Integrated Circuit (IC): A set of electronic circuits on one small flat piece of semiconductor material (the "chip").
• Fabrication (Fab): The highly complex manufacturing process of creating semiconductor chips.
• ATP: Assembling, Testing, and Packaging—the final stages of the semiconductor production cycle.
• 32nm Technology: A specific node size for chip manufacturing; while not the most advanced (2nm–3nm), it remains highly relevant for various electronic and defense applications.
• Global Supply Chain: The interconnected network of countries and companies required to source raw materials, design, manufacture, and package chips.

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1. Vietnam’s Semiconductor Milestone

Vietnam has officially broken ground on its first domestic semiconductor fabrication plant at the Hoa Lac Hi-Tech Park. Spanning 27 hectares, this facility is intended to serve as national infrastructure for research, design, testing, and production. According to Mr. Le Quang Dam of Marvell Technology, this represents a "huge step" for Vietnam in integrating into the global semiconductor supply chain.

2. Strategic Rationale and Market Positioning

• National Security: The primary driver for this initiative is national security. By developing domestic fabrication capabilities, Vietnam aims to master critical technologies and reduce reliance on foreign entities for sensitive defense and security applications.
• Niche Market Strategy: Vietnam acknowledges it cannot compete head-to-head with industry giants like TSMC (Taiwan), Samsung (Korea), or GlobalFoundries (USA), which dominate 90% of the mass-market (e.g., AI processors, high-end mobile chips). Instead, Vietnam is focusing on a "niche market" strategy, specifically targeting defense and security-related hardware.
• Geographic Advantage: Vietnam’s extensive coastline facilitates the complex import-export logistics required for the semiconductor industry, which involves moving materials and components across dozens of countries during the production cycle.

3. Technical and Operational Framework

• The Production Process: Manufacturing an IC is an intricate process involving thousands of steps and taking 4–6 months from initial design to final packaging. It requires global collaboration for raw materials (silicon, chemicals) and specialized equipment.
• Technology Node: Viettel is focusing on 32nm technology.
  • Economic Feasibility: A 32nm fab requires an investment of approximately $1–2 billion. In contrast, state-of-the-art 2nm or 3nm fabs require $40–50 billion, which is deemed unrealistic for Vietnam’s current stage.
• Infrastructure Requirements: Success depends on stable, uninterrupted electricity, high-purity water supply, and a robust talent pipeline.

4. Implementation Timeline

• Phase 1 (Now – 2027): Construction and infrastructure development.
• Phase 2 (2027 – 2030): Trial runs and operational testing to ensure the facility functions correctly.
• Phase 3 (Post-2030): Full-scale effectiveness, where the facility will support domestic companies, startups, and university research, allowing students to experience the full lifecycle of IC production.

5. Key Perspectives and Expert Insights

• Collaboration over Competition: Mr. Le Quang Dam emphasizes that Vietnam’s goal is not to displace global leaders but to find efficient, successful niches.
• Talent Development: A critical bottleneck identified is the need for skilled workers, engineers, and researchers. The government is prioritizing partnerships with universities and institutes to build this workforce.
• Significant Statement: "We do not compete against all the giant companies... but we always can find a niche market, a very narrow one that we can work efficiently and make it successful." — Mr. Le Quang Dam

Synthesis and Conclusion

Vietnam’s entry into semiconductor fabrication is a calculated, strategic move focused on national sovereignty rather than mass-market dominance. By selecting the 32nm node, the country balances financial feasibility with practical utility for defense and security. The success of this project hinges on three pillars: the development of specialized infrastructure, the cultivation of a highly skilled technical workforce, and the ability to integrate into the global supply chain while maintaining a focus on niche, high-value applications.