Vietnam Semiconductor Market Assessment, By Type, By Components, By Node Size, By End-user, By Region, Opportunities and Forecast, 2017-2031F

Vietnam semiconductor market is projected to witness a CAGR of 7.60% during the forecast period 2024-2031, growing from USD 9.58 billion in 2023 to USD 17.21 billion in 2031. Nowadays, Vietnam is gaining momentum to become a country of considerable importance, particularly due to its large semiconductor producers and increased demand from other Asian countries. The country is gearing up to increase its manufacturing capacity and overseas customers, notably from the United States. The government has implemented favorable policies related to taxation and investment promotions for market growth.

Other market growth factors include strategic location, competitive labor costs, and skilled manpower, further positioning it as a hub for semiconductor manufacturing in the region and attracting investments by industry giants such as Intel and Samsung. Thus, with the country continuing infrastructure investments and developing local talent, it is well positioned to meet this increased demand in semiconductors and earnestly contribute towards economic diversification and technological advancement.

Increasing Focus on 5G Connectivity is Amplifying Market Growth

A focus on 5G connectivity in Vietnam will continue to spur demand for semiconductors and drive growth in the country's semiconductor market. The government has invested in 5G infrastructure and supports startups and other players engaged in establishing 5G connectivity across Vietnam.

For instance, in July 2023, the 1st 5G PNM mobile network was created and deployed in Vietnam by Viettel for smart industries. The 1st network operator to win the 2500-2600 MHz at golden frequency band auction in March 2024. Viettel contributed to 5G coverage being 1.7 times greater than the two frequency band blocks of 3700-3800-MHz and 3800-3900-MHz. As per Viettel, the company hopes to offer widespread commercial 5G coverage in 63 provinces and cities of the nation, by the end of 2024, extending till next year.

A Continuous Need for Data Protection is Proliferating the Market Growth

The demand for semiconductors is expanding dramatically in Vietnam due to the growing need for data protection generated by artificial intelligence and cloud computing developments. Efficient real-time storage and processing solutions are becoming indispensable for organizations to handle enormous volumes of data daily. The Vietnamese semiconductor industry is being forced to increase production capacity to fulfill the expanding needs of data centers and electronic gadgets.

For instance, in February 2024, The Vietnamese Ministry of Public Security, announced that it had promulgated the Law on Personal Data Protection (PDP). This move was meant to strengthen measures for data privacy in the country. The main motive of this law is to establish strong frameworks and regulations that ensure the secure management, processing, and use of personal data. Hence, it can be deciphered that the PDP Law assures the country's citizens of their rights to privacy, therefore building trust in the fast-growing digital space.

A Rapid Growth in the Consumer Electronics Sector is Amplifying the Market Prosperity

The expansion of the consumer electronics sector is proliferating the semiconductor market in Vietnam. The demand for gadgets, such as smartphones, tablets, and smart home appliances, is growing due to urbanization and increased disposable incomes. Moreover, the government programs encourage high-tech businesses and the adoption of cutting-edge technology such as IoT and 5G, fueling this boom.

For instance, in June 2024, The Vietnamese government stated, after rigorous testing in 55 of the country's 63 provinces, 5G services will be made available nationally by the end of 2024. Major telecom providers such as Viettel, MobiFone, and VNPT are bidding for frequency bands that are up for auction from the Ministry of Information and Communications. The government delineated that 5G will contribute considerably to the economy by enhancing digital infrastructure, with GDP growth expected to reach 7.34% by 2025. In addition, 2G networks will be phased out as part of the transition, thereby easing the move toward a digital society.

Launch of Training Programs in Vietnam is Expediting the Market Prospects

Vietnam is prioritizing training programs in semiconductors to meet the increasing need for qualified engineers in this field. The training program is essential for fostering technological progress, especially in the areas of 5G and microchip manufacturing, as Vietnam looks to improve its position in the global semiconductor market.

For instance, in July 2024, through a collaboration with American companies Qorvo and Cadence, the Vietnamese government planned to expand its semiconductor sector by introducing new training courses in analog IC design. Forty trainees are presently enrolled in an intense program at the National Innovation Center, which seeks to teach 50,000 engineers in total. This program is expected to help in closing the skill gap in the semiconductor industry worldwide and facilitates Vietnam's incorporation in the international supply chain. Along with workforce development and infrastructural expenditures, the partnership promotes innovation and industry growth.

Government Initiatives Acting as a Catalyst

The government initiatives and policies towards the improvisation of semiconductors are aiding the market growth extensively. The government is focusing on the technological advancements of semiconductors via substantial investments in the sector. For instance, in May 2024, to encourage semiconductor investments in Ho Chi Minh City, the Vietnamese government strictly announced that the projects must have an initial investment of around USD 1.6 billion. Strategic investors will benefit from this effort by receiving tax advantages, accelerated customs processing, and assistance with equipment acquisitions. Vietnam's dedication to expanding its semiconductor sector intends to improve collaboration with global enterprises and expedite investment processes.

Southern Vietnam to Dominate the Semiconductor Market Share

Southern Vietnam dominated the share of the semiconductor market in the country due to its strategic location, qualified labor force, and governmental policies that attract FDI. Major companies such as Intel and Samsung have opened important operations in Ho Chi Minh City, which offers tax breaks and competitive advantages in electronics manufacturing.

Moreover, competitive labor costs and proximity to growth further enhance the appeal of the region, reinforcing semiconductor production and assembly. Besides the high-tech industry development promoted vigorously by the government, the position of Southern Vietnam as a critical node in the global semiconductor market is expected due to increased demand for 5G and AI in the region.

Future Market Scenario (2024 - 2031F)

Vietnam's advantageous location in Southeast Asia makes it easier for the country to access key markets, resulting in a desirable center for manufacturing, and gaining significant profits for Vietnam semiconductor market in the forecast years.

To attract international investments, which could meet the market's wide future potential, Vietnamese government is actively encouraging the semiconductor market through tax benefits, promotion of investment programs, and the creation of a national steering council, thereby creating a possibility of yielding a plethora of opportunities for market enhancement in the future.

There is a growing need for semiconductor solutions in a number of industries, including consumer electronics and telecoms, due to the emergence of cutting-edge technologies such as 5G, AI, and the Internet of Things.

Key Players Landscape and Outlook

As Vietnam is an emerging market in semiconductors, the key players operating in the market are continuously competing against each other to gain a competitive edge. Moreover, the increase in collaborations among the big players for semiconductor projects in Vietnam is expected to cater to extensive possibilities of market growth at present and in the future.

In February 2023, the United States-based global semiconductor player, Intel Corporation, announced that it is planning to spend a hefty sum in fast-growing semiconductor industry segment of Vietnam. The biggest assembly and test factory of the company so far was in Ho Chi Minh City, but now it will look for opportunities to take full advantage of Vietnam's strategic position, skilled workforce, and encouraging government policies. The plan for expansion would go in line with Intel's general strategy to further diversify its manufacturing footprint and boost its competitive edge in the dynamic Asian market.