Foundations for semiconductor industry development

The Ho Chi Minh City People’s Committee recently approved a plan to develop the semiconductor industry at the city’s Saigon Hi-Tech Park in the 2025-2030 period. In particular, the city aims to establish a robust semiconductor industry ecosystem by 2030. Earlier, Hanoi, through its revised Capital Law, identified semiconductors as a strategic priority for investment. Starting from January 1, 2025, several preferential policies specifically for companies and investors in the industry will take effect.

In the central region, meanwhile, Da Nang is building the “Development of Semiconductor Chips and Microchips in Da Nang” project, which is awaiting approval. If passed, the project will significantly enhance the city’s technological capabilities by attracting more businesses and experts.

Hi-tech parks: The ‘chip’ of the semiconductor industry

Semiconductor production requires advanced technical infrastructure and abundant resources to meet the industry’s rigorous demands. Hi-tech parks, equipped with modern infrastructure, a favorable legal framework, and supportive investment policies, are being prioritized by cities and provinces to become hubs for semiconductor research and development (R&D).

As part of its semiconductor development strategy, Ho Chi Minh City is positioning the Saigon Hi-Tech Park as the country’s leading center for microchip industry R&D. The park also serves as a training ground in microchip design skills for personnel from the city and neighboring provinces such as Dong Nai and Binh Duong.

The city also plans to soon establish a $5 million fund to develop human resources for microchip design, aiming to train and upskill approximately 40,000 engineers by 2030.

Additionally, to foster a business ecosystem at the Saigon Hi-Tech Park, the Saigon Hi-Tech Business Incubator (SHBI) will be upgraded into an innovation center. This will create a startup ecosystem for companies focused on soft-core microchip design and development.

Similarly, under Hanoi Capital Planning for the 2021-2030 period, Hanoi has prioritized investment in the Hoa Lac Hi-Tech Park to support R&D in the semiconductor sector.

Hoa Lac is home to many of Vietnam’s leading technology organizations, including Viettel, FPT, MobiFone, Vinaphone, CMC, and the National Innovation Center (NIC). Experts believe that these organizations give the Hi-tech park a significant advantage in becoming a national hub for the microchip industry.

Though Da Nang already has one hi-tech park and three IT (information technology) parks, the city still plans to invest in additional IT parks to support high-tech projects, including microchip R&D, in its effort to become a key player in the semiconductor industry.

With attractive incentive policies, Da Nang Hi-Tech Park has already drawn international semiconductor giants like Intel and Synopsys. Thanks to its strong infrastructure, skilled workforce, and supportive policies, the city is expected to continue attracting leading semiconductor companies.

For example, after investing $135 million in Phase 1 of the Da Nang Hi-Tech Park, Taiwan (China)’s Foxlink International Investment plans to bring in several semiconductor companies from Taiwan (China) and Japan to invest.

Vietnam’s success in attracting major companies such as Samsung, Intel, and Amkor, which have collectively invested billions of dollars into semiconductor manufacturing facilities, has significantly enhanced the country’s production and packaging capabilities. However, the highest value in the semiconductor industry lies not in production but in chip design and development; a critical area Vietnam aspires to lead in. Hi-tech parks will serve as the incubators to achieve its goal.

Fostering favorable conditions

To attract both domestic and international businesses and investors to Vietnam’s semiconductor ecosystem, cities and provinces have identified preferential policies - such as land tax exemptions and corporate and personal income tax incentives - as essential tools to gather resources and achieve the goal of mastering microchip technology.

Under the Capital Law No. 39/2024/QH15, enacted on June 28, companies investing in and developing the semiconductor industry are entitled to the following benefits: a ten-year exemption from land and water surface rental fees, followed by a 50 per cent reduction for the remaining period, and a 5 per cent corporate income tax rate. Additionally, businesses are exempt from corporate income taxes for four years, followed by a 50 per cent tax reduction for the next nine years.

In the near future, Da Nang will implement a range of policies to attract investment and build a semiconductor microchip ecosystem. These include offering land leases without requiring a land use rights auction and granting priority customs and tax procedures. Furthermore, companies involved in the design, production, packaging, and testing of semiconductor microchips will receive a five-year exemption from corporate income taxes.

In practice, beyond the leading tech hubs of Hanoi, Da Nang, and Ho Chi Minh City, other locations like Bac Ninh and Bac Giang provinces in Vietnam’s north are also actively investing in infrastructure, supporting businesses, and developing a skilled workforce to cultivate a thriving semiconductor ecosystem. According to Statista, Vietnam’s semiconductor market is expected to generate $18.23 billion in revenue this year. From 2024 to 2029, the market is projected to grow at an annual rate of 11.48 per cent, reaching $31.39 billion by 2029.

Dr. Nguyen Nhat Quang, Vice President of the Vietnam Software and IT Services Association (VINASA) and Director of the VINASA Science and Technology Institute, said the key difference between all cities and provinces is their ability to create effective policies that best support their goals. “For example, though localities like Bac Ninh, Bac Giang, and nearby Thai Nguyen do not have semiconductor strategies like the major cities of Ho Chi Minh City, Hanoi, Da Nang, they have managed to attract significant investors and are making remarkable progress,” he told VET. “This shows that when favorable conditions, good policies, and genuine local leadership are in place, sectoral development can be accelerated.”

Meanwhile, Mr. Nguyen Van Khoa, CEO of the FPT Corporation, emphasized that a strong legal framework is crucial for Vietnam’s semiconductor development strategy, both at the national and local levels. This framework should include investment incentives, R&D policies, and access to natural resources, land, and energy. He stressed that a formalized law specific to the semiconductor industry is necessary to promote its growth. Once established, this law would provide government agencies with the foundation needed to build and expand the semiconductor sector.