With much effort already expended, 2026 is considered a pivotal year for Vietnam’s semiconductor industry.

Vietnam’s semiconductor
industry has been gradually moving beyond the orientation and policy discussion
stage and towards concrete implementation in recent times. Alongside the Law on
Science, Technology and Innovation, the Law on Digital Technology Industry, which
took effect on January 1, has laid a legal foundation for semiconductor development
in the country. The first standalone legislation of its kind globally, the Law aims
to promote the digital industry, with a focus on semiconductors, AI, and digital
assets.

Investment incentives

The Law on
Digital Technology, together with other laws on investment, corporate income tax,
and import-export activities, introduces special support mechanisms and incentives
for industrial semiconductor activities. For example, semiconductor manufacturing
RD projects with investment capital starting from VND6 trillion ($230.76 million)
will be subject to a 5 per cent tax rate for 37 years; a tax exemption for six years
followed by a 50 per cent reduction for the next 13 years; full exemptions from
land and water surface rental fees; personal income tax exemptions for highly-qualified
personnel for five years; and five-year visa and work permit exemptions for highly-skilled
foreign workers.

According to Mr.
Nguyen Khac Lich, Director General of the Department of Information Technology Industry
at the Ministry of Science and Technology, these are exceptional, sector-specific
incentives. Comparable incentives in other priority sectors typically apply only
to projects with investment capital of at least VND30 trillion ($1.15 billion).

In November, the
Ministry also issued six circulars guiding implementation of the Law on Digital
Technology and submitted two decrees to the government, both of which took effect
simultaneously with the Law on January 1. “This demonstrates the Vietnamese Government’s
comprehensive vision in creating favorable conditions for key suppliers to participate
in the domestic value chain,” Mr. Lich said.

On December 24,
the Minister of Science and Technology issued Decision No. 4386/QD-BKHCN defining
the functions and structure of the national center for support of semiconductor
chip pilot production, called the Vietnam National Multi-Project Wafer Coordination
Center (VNMPW/CC), under the Ministry’s Department of Information Technology Industry.
The Center will connect research institutions and chip design companies with fabrication
plants (fab plants), packaging and testing facilities, and technology partners at
home and abroad, supporting the entire pilot production chain from design to chip
evaluation.

Mr. Bui Thanh Minh,
Deputy Professional Director of the Office of the Private Economic Development Research
Board (Board IV), noted that Vietnam’s push for semiconductor development comes
amid a global resurgence of industrial policy. Excessive reliance on a few manufacturing
hubs is now viewed as a strategic risk, he explained, and as global supply chains
shift, Vietnam cannot remain outside such a trend. Moreover, the country’s growth
model, based largely on low-cost labor and resource extraction over the past 30-40
years, has helped lift it out of poverty but is reaching its limits in boosting
productivity and incomes.

“As the population
ages and labor advantages decline, the need to transition to a knowledge,
technology, and high value-based growth model becomes urgent,” he said. “Following
the path of many economies, after light industry and electronics, semiconductors
and AI-related technologies represent the next inevitable stage of development rather
than a temporary choice.”

Asserting a role

Vietnam has identified
semiconductors as a strategic technology crucial for enhancing its competitiveness,
driving its economic growth, and strengthening its national standing. At the SEMI
EXPO Vietnam 2025 in November, Deputy Minister of Science and Technology Bui Hoang
Phuong said the country currently hosts more than 170 foreign-invested semiconductor
projects with total registered capital of nearly $11.6 billion. Vietnam’s semiconductor
supply chain mainly focuses on two stages: chip design and chip packaging and testing.

Ms. Linda Tan, President
of SEMI SEA, emphasized Vietnam’s remarkable progress, noting that the country has
refined policies, strengthened infrastructure, and heavily invested in talent –
laying the groundwork for a vibrant, globally-connected semiconductor ecosystem.

Also attending the
event, Ms. Ly Nguyen, Manager of Asia Pacific Advisory at the Tony Blair Institute
for Global Change (TBI), highlighted Vietnam’s favorable conditions for gradually
asserting its role in the global semiconductor value chain. To move closer to becoming
a regional hub or a recognized player on the global semiconductor map, she said
Vietnam must ensure coordinated alignment between policies, implementation capacity,
and links across stakeholders, from government and businesses to educational and
research institutions.

Vietnam is on the
right track, Ms. Ly noted, having adopted both a semiconductor development strategy
and a workforce development strategy for the sector. The country must clearly define
the core value it can offer, leverage its human capital advantages, and select segments
that deliver sustainable value aligned with long-term socio-economic goals, while
identifying the needs it can meet regionally and globally.

Clear delineation
of stakeholder roles, including government, industry, and academia, is essential
for effective coordination, knowledge diffusion, and the establishment of measurable
targets for each priority segment of the semiconductor industry.

Standardizing and
harmonizing technical standards with international benchmarks would give domestic
suppliers a significant competitive advantage in becoming Tier 1 vendors to global
corporations, she added. Clear policies, especially strong intellectual property
protection, are also a leading concern for foreign investors in high-tech sectors,
including semiconductors.

Opening new opportunities

These policy and
institutional requirements align with expectations from global technology corporations.
According to Mr. Brian Tan, Regional President of Southeast Asia at Applied Materials,
the Covid-19 pandemic made supply chain resilience a top priority, shifting the
world from a “just-in-time” to a “just-in-case” mindset. Applied Materials’ supply
chain strategy rests on four pillars.

The first is sustainability
and resilience, as the fast-growing semiconductor industry faces geopolitical and
macro-economic volatility. The second is delivery time and environmental sustainability,
with supply chains moving closer to operational hubs. Before Covid-19, Southeast
Asia accounted for about 10 per cent of Applied Materials’ global supply chain spending;
this has now risen to more than 20 per cent, reflecting a strategic shift.

The third pillar
is trust, as customers prefer to work only with reliable partners – a message consistently
conveyed to suppliers across the ecosystem. And the fourth is intellectual property
protection, viewed not only as a business process requirement but also as a matter
of corporate security for companies holding core technologies.

According to H.E.
Kees van Baar, Ambassador of the Netherlands to Vietnam, understanding partners’
needs will open new opportunities for Vietnam as manufacturing capacity grows and
the supporting industrial ecosystem strengthens. These factors position Vietnamese
companies to become suppliers to global semiconductor companies, particularly those
already operating in the country. Strengthening Vietnam’s semiconductor capabilities
will diversify global supply chains, benefiting both Vietnam and other countries.

Vietnam currently
has 58 design companies, including 13 domestic and 45 foreign firms. The government
is developing a project to build a small-scale, high-tech semiconductor fab plant
to serve research, design, and production needs, with operations planned by 2030.
In addition, there are eight packaging and testing projects – one domestic and seven
foreign-invested, including by Intel, Amkor, and Hanna Micron. Vietnam is also seeing
the emergence of companies supplying semiconductor materials and equipment, such
as Coherent and VDL Enabling Technologies Group.

Mr. Lich said Vietnam’s
approach to semiconductor development is to define a clear national strategic direction,
with the State acting as a facilitator through policy while enabling deep private
sector participation in global supply chains. Rather than pursuing a broad-based
model, Vietnam is focusing on segments aligned with domestic capabilities and creating
favorable conditions for businesses to connect with international corporations.
“Overall, three factors determine international companies’ investment decisions
in Vietnam: the policy environment, geopolitical advantages, and human resources,”
he said.

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