Latest / The Emerging Markets Podcast with Fexingo: Developing Economies, Growth, and Investment / How Vietnam Is Becoming the Semiconductor Link in EM Supply Chains
Transcript
- Lucas: We talk a lot about China and Taiwan when it comes to chips, but there is a country quietly positioning itself as the next critical link in the semiconductor supply chain, and that's Vietnam. Luna: Vietnam has been on the radar for low-cost manufacturing for years, but semiconductors feel like a big leap from sneakers and furniture. Lucas: It is a leap, but it's happening. In the last twelve months, Vietnam's electronics exports have grown nearly twenty percent year-over-year, and a big chunk of that is now semiconductor-related. We're seeing major players like Samsung, Intel, and a few Chinese chip firms expanding their assembly and testing facilities there. Luna: And it's not just assembly. I read that Amkor Technology opened a massive advanced packaging facility near Hanoi earlier this year. That's high-value stuff. Lucas: Exactly. Amkor's facility is focused on system-in-package and advanced packaging, which is a step up from basic assembly. That's significant because packaging is becoming a bottleneck in the chip world as Moore's Law slows. Vietnam is positioning itself as a hub for that. Luna: So what's driving this? Is it purely the trade war, or are there structural advantages? Lucas: It's a mix. The trade war is definitely a factor — companies are looking to reduce dependence on China and Taiwan. But Vietnam also has a young, literate workforce, political stability, and a bunch of free trade agreements. The eu vietnam trade deal, the CPTPP — they give Vietnam tariff-free access to major markets. That matters when you're shipping chips globally. Luna: And the US dollar is strong right now. The trade-weighted dollar index is at 120, which generally hurts emerging markets, but for Vietnam, a weaker dong makes its exports cheaper. That's a tailwind. Lucas: Good point. The dong has weakened about three percent against the dollar this year, and that's helped Vietnam's trade balance. Their trade surplus with the US has been widening. But the challenge is that Vietnam imports a lot of components from China and South Korea, so a strong dollar also raises input costs. Luna: There's a tension there. But the bigger question is: can Vietnam move beyond packaging and assembly into actual chip design or fabrication? That's where the real value is. Lucas: That's the long-term bet. Right now, Vietnam's semiconductor involvement is mostly in the back end — assembly, testing, packaging. But the government has a national strategy to develop a semiconductor ecosystem by 2030. They're offering tax incentives, investing in education, and courting design houses. It's early, but the trajectory is promising. Luna: It reminds me of what happened in electronics manufacturing more broadly. Vietnam went from basically nothing to being a top exporter of smartphones in about a decade. If they can replicate that in chips, it's a massive opportunity. Lucas: Exactly. And you can see it in the equity markets. The Vietnam ETF, ticker V-N-M — which tracks Vietnamese stocks — is up about twelve percent this year. That's outpacing most other emerging markets, which have been pretty volatile. Luna: Speaking of that, we should mention that our show is ad-free, and that's a choice we make because we want to keep the conversation focused on what matters. If you find value in these deep dives, you can support us at buy me a coffee dot com slash fexingo. It helps us keep doing this without any sponsor noise. Lucas: Yeah, listeners like you are the reason we can go deep into topics like Vietnam's chip strategy without having to sell you anything. So, back to the supply chain — one risk I want to flag is that Vietnam's success could also make it a target. If the US starts cracking down on transshipment or if the trade war escalates, Vietnam could get caught in the crossfire. Luna: That's a real risk. The US has already put Vietnam on a currency manipulation watch list, and there's talk of tariffs if trade imbalances don't narrow. So Vietnam is walking a tightrope. Lucas: Right. But for now, the momentum is undeniable. And it's not just semiconductors — Vietnam is also becoming a hub for data centers and AI infrastructure. Big tech companies are setting up cloud regions there because of the growing demand from Southeast Asia. Luna: So if you're an EM investor, Vietnam is one of the few markets where the story is about growth and value chain upgrade, not just commodity cycles or debt problems. Lucas: Exactly. And that's why it's worth watching. Whether you're interested in chips, trade flows, or emerging market equities, Vietnam is the country to keep an eye on in the second half of 2026. Luna: We'll be tracking it. For now, that's our take on Vietnam's semiconductor push. Thanks for listening.