Chipmakers Are Starting to Flee China. Their Destination Is the Next Great Semiconductor Hub

The pressure from the U.S. and its allies on Chinese semiconductor manufacturers is prompting a relatively predictable shift: Some chipmakers are starting to exit China in search of a country where they can operate with fewer restrictions. However, it’s not just Chinese companies taking this step. Foreign giants like Samsung, TSMC, Intel, and UMC, which operate integrated circuit plants in China, are also preparing to relocate.

For the Asian giant, this potential large-scale departure poses significant challenges. The semiconductor industry plays a crucial role in the Chinese economy and the country’s technological ambitions. As such, a departure of chipmakers would result in substantial economic and strategic losses. Countries like the U.S., South Korea, Taiwan, and Japan would likewise feel the effects if an exodus of this scale impacted their own semiconductor industries, which are considered strategically vital to these and other developed countries.

Vietnam Emerges as a Semiconductor Hub

Hana Micron, a South Korean company specializing in assembling, testing, and packaging integrated circuits, is moving its facilities from China to Vietnam. According to Reuters, the company plans to invest $923.5 million over the next few years to expand its operations in the Southeast Asian nation. U.S. firms such as Amkor Technology and Intel have already invested billions in Vietnam to build out chip manufacturing and packaging infrastructure.

As Tom’s Hardware reports, it’s unclear which Chinese manufacturers are planning to exit China, but details will likely emerge in the coming weeks. That said, the exciting thing is to find the exciting thing is to find out what makes Vietnam such an attractive country for the IC industry. Most importantly, the Vietnamese government is creating a favorable climate to encourage foreign companies to invest.

In fact, the Vietnamese government has set an ambitious goal: generating $100 billion from its chip industry and over $1 billion from the electronics sector by 2050. While that might sound far off, it’s a tight timeline for rebuilding a sector intended to become a centerpiece of the economy.

Vietnam is no stranger to the semiconductor industry. Companies like Intel, Samsung, Amkor, Texas Instruments, Qualcomm, and Infineon already operate in the country. Prime Minister Pham Minh has developed a detailed plan to build capacity for specialized chip design, promote the electronics sector, train skilled workers, and attract foreign investment. By 2050, the country aims to have six semiconductor factories and 20 packaging and testing plants.

To achieve these goals, Minh has divided his strategy into three distinct phases. The first phase, now underway, aims to attract foreign direct investment to establish at least 100 chip design companies, one semiconductor fabrication plant, and 10 packaging and testing facilities. The second phase, set to begin in 2030, will focus on training more than 100,000 engineers specializing in semiconductors, establishing at least 200 chip design companies, building two additional factories, and setting up 15 packaging and testing plants.

The third and final phase will start in 2040, with a goal to establish 300 more integrated circuit design companies, three semiconductor fabs, and 20 packaging and testing facilities. If the government manages to turn its vision into reality, Vietnam will have more than 600 chip design companies by 2050, along with the six fabs and 20 packaging plants mentioned. The country’s ambitions are clear.

Image | TSMC

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