Vietnam's Rare Earth Reserves Power Semiconductor Ambitions with US Support

The U.S. Geological Survey estimates Vietnam's rare earth element reserves at around 22 million tons, ranking second globally after China. These rare earth elements are crucial for semiconductor production in high-tech industries, including electronic module and electric vehicle battery manufacturing.  

With limited resources and efficient rare earth separation technology yet to be developed, collaboration with leading global corporations for exploration, processing, and utilization becomes a favorable solution. 

Amid the U.S.-China semiconductor rivalry, Vietnam has emerged as an alternative for semiconductor manufacturing. During President Joe Biden's visit to Vietnam in September 2023, both countries recognized Vietnam's potential in the semiconductor industry. A joint statement outlined initiatives for workforce development, with the U.S. government providing an initial seed funding of $2 million, signaling a commitment to elevate Vietnam's position in the global semiconductor supply chain. 

In 2023, Vietnam welcomed major semiconductor projects, including the inauguration of Hana Micron's semiconductor plant in September and Amkor Technology's plant in October. According to Vietnam's Ministry of Information and Communications, the country accounted for over 10% of global chip imports into the U.S. for seven consecutive months, ranking third in Asia for semiconductor exports to the U.S. 

In the automotive industry, the integration of semiconductor chips has become crucial, powering various systems in both traditional and electric vehicles. As electric vehicles gain traction, the demand for high-tech semiconductor chips is expected to rise significantly. VinFast, a Vietnamese electric vehicle manufacturer, collaborated with NVIDIA to integrate advanced semiconductor chips into its electric vehicle models, enhancing safety and autonomous driving capabilities. 

Experts predict a resurgence in demand for high-tech chips in smart vehicles starting from the second half of 2024. This presents an opportunity for developers, manufacturers, and packagers of semiconductor chips to cater to the automotive industry in Vietnam. 

While Vietnam had aspirations for semiconductor self-sufficiency with the introduction of the ICDREC electronic chip in 2008, economic constraints and a lack of long-term strategy hindered its success. Presently, Vietnamese enterprises primarily focus on chip design, leaving packaging and testing to foreign firms. Nevertheless, with a young and abundant workforce, Vietnam has become an appealing destination for semiconductor research and design. 

Prime Minister Pham Minh Chinh expressed Vietnam's determination to participate in all three stages of the semiconductor value chain—design, manufacturing, and packaging. The government plans to prioritize design, followed by testing and large-scale production, while developing supporting industries and material-related sectors. Vietnam aims to make significant investments in becoming a major player in the semiconductor industry and building a comprehensive semiconductor ecosystem.