Latest / The Emerging Markets Podcast with Fexingo: Developing Economies, Growth, and Investment / How Vietnam Is Becoming a Semiconductor Outsourcing Hub
Transcript
- Luna: Lucas, I was looking at the EEM up another 1.6% this week, and one name keeps popping up in the supply-chain chatter that I don't think we've talked about — Vietnam. Lucas: Yeah, Vietnam's been on my radar too. For years it was the footwear and furniture play, but the story now is semiconductors. And it's not just talk — actual billions in committed projects. Luna: So the big one I'm seeing is Amkor Technology. They broke ground on a 1.6-billion-dollar advanced packaging facility near Hanoi last year. It's supposed to be fully operational by, what, end of 2026 or early 2027? Lucas: That's right. Amkor's facility is in Yen Phong Industrial Park, about an hour from Hanoi. It's going to be one of the largest semiconductor assembly and test facilities in the world. And they're not alone — Intel already has a huge operation in Ho Chi Minh City, and Samsung is building out its backend capacity too. Luna: I think Intel's Vietnam facility is actually their largest assembly and test site globally. So this isn't just a side experiment — it's central to their supply chain. Lucas: Exactly. And the Vietnamese government is leaning hard into this. They've introduced something called the 'Semiconductor Industry Development Strategy' — target is to train 50,000 chip engineers by 2030, and they're offering tax holidays and land rent exemptions for qualifying projects. The corporate income tax rate can go as low as 5 percent for certain high-tech investments. Luna: Fifty thousand engineers — that's a massive workforce build. Where are they coming from? I mean, Vietnam's engineering pipeline is growing, but that's a big leap. Lucas: They've partnered with a bunch of universities — both domestic and international. There's a program with Arizona State University, also with South Korea's KAIST. They're sending Vietnamese students abroad and bringing in foreign faculty. The government has allocated around 300 million dollars for semiconductor education over the next five years. Luna: That's real money for a country with a GDP per capita still under 4,000 dollars. It shows they're serious. Lucas: Completely. And the timing works in their favor. The whole 'China plus one' narrative — companies looking to diversify supply chains out of mainland China — Vietnam is the most direct beneficiary, especially for electronics. You've got Apple moving some iPad and AirPod production there, and now chip packaging is the next logical step. Luna: But packaging is only one part of the value chain. Vietnam isn't doing actual wafer fabrication — the really capital-intensive front-end stuff. So is this a sustainable niche, or could they eventually move up? Lucas: Great question. Right now, it's mostly assembly, test, and packaging — the back end. Those steps are less technically demanding but still require high precision and a reliable workforce. The margins are thinner than front-end fab, but the value-add per employee is still significant for an emerging economy. And look — Vietnam has a long-term ambition to move into design too. There are already a couple hundred design firms in Ho Chi Minh City, mostly serving the analog and mixed-signal space. Luna: Are there any numbers on how much of global chip packaging Vietnam currently handles? Lucas: It's still small — maybe 2 to 3 percent of the global outsourced semiconductor assembly and test market, or OSAT. But that's up from basically nothing five years ago. The big players are mostly in Taiwan, Malaysia, and China. Vietnam's share is growing fast, though. Industry estimates suggest it could reach 8 to 10 percent by 2030. Luna: And what about the geopolitical angle? Vietnam has pretty good relations with both the US and China. Does that give them an edge over, say, Taiwan? Lucas: It's a double-edged sword. On one hand, Vietnam avoids the immediate cross-strait tension. The US Department of State has listed Vietnam as a key partner in the 'Chip 4' alliance, alongside Japan, South Korea, and Taiwan. But on the other hand, Vietnam is still heavily dependent on China for raw materials and components. If the us china trade war escalates further, Vietnam could get caught in the middle. Luna: So for an investor looking at emerging market tech, is Vietnam a stock story or an ETF story? Lucas: Mostly ETF for now. There's a Vietnam-specific ETF — the VanEck Vietnam ETF, ticker V-N-M — which gives broad exposure. But the semiconductor angle is indirect because the ETF includes everything from banks to real estate. A more targeted play might be something like the iShares PHLX Semiconductor Sector Index ETF, but that's mostly US and Taiwan. For pure Vietnam chip exposure, you really have to look at individual companies — like Hana Micron, which is a South Korean OSAT company with a big plant in Vietnam, or Saigon Semiconductor, a local player. But those are less liquid. Luna: And that's the classic emerging market conundrum — you see the trend, but the investable vehicles aren't always there yet. By the time they arrive, the big returns might already be priced in. Lucas: Right. That's why it's so important to track the real economy signals — the factory construction, the policy moves, the workforce numbers. Those lead the stock market by months or even years. If Vietnam hits that 50,000 engineer target and the OSAT share grows to 10 percent, the companies feeding into that ecosystem will benefit first. Luna: And that kind of on-the-ground analysis is exactly why we spend so much time digging into these stories. It's not always about the hot stock of the week — it's about understanding where the puck is going. Lucas: Absolutely. And speaking of which — this show is only possible because of listeners who value that kind of independent analysis. We keep Fexingo ad-free and focused on the substance, and that's supported directly by the audience. If you find value in walking through the economy with us, you can support the show at buy me a coffee dot com slash fexingo. It's a simple way to help us keep doing what we do. Luna: Yeah, and it really does make a difference. Every contribution helps us dedicate more time to research and bring you the stories that matter. Lucas: So back to Vietnam — the next milestone to watch is the completion of Amkor's facility and whether they announce a second phase. That would signal confidence in the long-term workforce pipeline. Also keep an eye on any new design-center announcements from companies like Renesas or NXP. That would show Vietnam moving up the value chain. Luna: And we'll be watching the EEM and VNM for any breakout. Thanks, Lucas. Lucas: Thanks, Luna. See you next time.