Vietnam pledges more energy supply as chip race heats up
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Vietnam plans to secure sufficient energy supplies for chip and other technology companies, a state official told Nikkei Asia, acknowledging the difficult competition with neighbours such as Malaysia for semiconductor investments.
Hanoi will attract chip investors through tax breaks, research spending and investments in infrastructure such as power generation, said deputy minister of planning and investment Tran Duy Dong, who declined to give figures.
He said the fast-growing country would have to hustle as international competition grows and electricity shortages become a top business worry.
“We know the chance is not waiting for any country,” he said when asked about other Asian countries. India, for example, has approved the construction of its first chip fabrication plant, while Malaysia is courting foreign investment and attempting to nurture local players.
Geopolitical tensions and Covid-era supply chain disruptions have prompted companies to diversify production away from China, particularly in critical tech areas such as chips. This presents a once-in-a-generation opportunity for other countries to develop their own chip industries.
Vietnam is now exiting the dry season, when dwindling hydropower perennially threatens blackouts, which disrupted factories such as Samsung’s in 2023. It could take years for Vietnam to lure a company for chip fabrication, a high-precision business sensitive to power disruptions.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
Dong said Vietnam was bringing more energy projects online, citing a 500-megawatt project set for later this year to provide electricity to northern Vietnam, where chip investment is focused.
The country has dramatically increased coal imports, defying its own renewable energy targets, as well as posing a potential problem for companies under pressure to decarbonise supply chains.
Vietnam hosts dozens of chip companies, including Intel’s biggest test and assembly plant, and has intensified efforts to move past basic manufacturing.
Four chip research centres — two in Hanoi and one each in Ho Chi Minh City and Da Nang — are planned and will collaborate with private companies, Dong said, adding it was also working with 36 universities to train at least 50,000 engineers.
Vietnam will consider further tax and other incentives in addition to those offered to all high-tech investors, Dong said. “We’ll fine-tune our institutions,” he said. “The state budget we’re spending will be considerable.”
A version of this article was first published by Nikkei Asia on May 10. ©2024 Nikkei Inc. All rights reserved.
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