Vietnam promises stable power supply to attract chip investments


Vietnam offers tax incentives to attract foreign tech investments. (Photo: iStock)

In the context of the US-China tech war, many tech companies are relocating their factories to Southeast Asian countries. To attract foreign investment in industries such as semiconductors, Vietnam has not only offered tax reductions but also promised sufficient power supply and infrastructure to avoid a recurrence of last year's power shortage crisis.

The World Bank estimates that Vietnam suffered a loss of $1.4 billion last year due to power shortages, equivalent to 0.3% of Vietnam's GDP. Amid water and power shortages, there are reports that some Taiwanese semiconductor companies are planning to withdraw from the Vietnamese market.

Vietnam plans to build power plants, chip research centers to attract investment

According to BAOMOI, major semiconductor companies currently operating factories in Vietnam include South Korea's Samsung, Germany's Infineon, and America's Microsoft. Before power shortage crisis, Samsung had even discussed countermeasures with power companies, yet they still couldn't avoid the impact.

Tran Duy Dong, Deputy Minister of Planning and Investment, mentioned in an interview with "Nikkei Asia" that the authorities, in addition to offering tax reductions, are also increasing research expenditures and investing in infrastructure such as power plants to attract semiconductor companies. However, he declined to disclose specific figures, only emphasizing that the expenditure would be quite substantial.

A solar and wind power plant in Vietnam. (Photo: iStock)

He indicated that the Vietnamese government would launch more energy projects, including a 500 MW power project expected to be completed by the end of the year, which is anticipated to provide stable power to northern Vietnam, a key area for semiconductor development.

Furthermore, Vietnam has budgeted to jointly establish four semiconductor research centers with companies: two in Hanoi, one in Ho Chi Minh City, and one in Da Nang. Additionally, Vietnam is collaborating with 36 universities to train at least 50,000 engineers.

Chip war intensifies: Malaysia and India compete to build chips plants

Samsung's factories in Vietnam faced shutdowns because of high summer temperatures and decreasing water levels in hydroelectric reservoirs in 2023.

Intel, which has the world's largest chip packaging and testing plant in Vietnam, reportedly paused its expansion plans last year due to unstable local power supply and bureaucratic issues. However, after multiple meetings with Vietnamese officials, it seems that Intel has regained confidence and is planning to increase its production capacity.

The semiconductor market is highly competitive. In late February, the Indian government approved a $15.2 billion project for the country’s first semiconductor plant. Meanwhile, Malaysia is also attracting foreign investment and nurturing local enterprises. Seizing the opportunity, the Vietnamese government hopes to secure a share of the market. Tran Duy Dong stated, " We know the chance is not waiting for any country."

Source: BAOMOI, Nikkei Asia

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