Ho Chi Minh Metropolis, Vietnam – On a sunny California afternoon in late September, Vietnamese Prime Minister Pham Minh Chinh toured Silicon Valley, internet hosting officers from semiconductor firms Synopsys and Nvidia.

A bit over a month earlier in Hanoi, Pham instructed 4 authorities ministries to extend the variety of Vietnamese engineers in a position to work in semiconductor manufacturing by tens of hundreds.

The federal government's efforts to make Vietnam a lovely possibility for chip funding have continued within the new 12 months.

Science and Expertise Minister Huynh Thanh Dat final month instructed native media that authorities have put in place tax incentives for high-value-added merchandise resembling semiconductors.

Dat mentioned the nation wished to welcome a “wave” of funding in collaboration with different ministries and know-how firms to spice up analysis and entice expertise to the semiconductor sector.

Vietnam has aimed to develop into a number one participant within the world provide chain for semiconductors – the skinny built-in circuits important to trendy know-how.

As Hanoi and a bunch of countries align on the necessity to take dangers from China amid escalating geopolitical tensions, the Southeast Asian nation seems to be gaining momentum in its bid to compete with the dominance of Taiwan and South Korea.

But Vietnam additionally faces obstacles, together with a restricted pool of expert labor and vitality insecurity within the nation's technological manufacturing hub within the north.

The worldwide push to diversify semiconductor provide chains is in keeping with Hanoi's improvement targets, mentioned Le Hong Hiep, a Singapore-based ISEAS-Yusof Ishak Institute senior fellow who beforehand labored as official on the Ministry of Overseas Affairs of Vietnam.

“The semiconductor business is seen as an important business that may assist Vietnam rework its economic system and rework Vietnam right into a developed and high-income economic system by 2045,” Hiep instructed Al Jazeera.

“When it comes to timing and strategic atmosphere, it’s favorable for Vietnam to develop the business now.”

On the floor, Vietnam's chip ambitions look like flourishing amid an inflow of overseas capital.

Nvidia co-founder and CEO Jensen Huang described Vietnam as the corporate's “second dwelling”. [Tyrone Siu/Reuters]

Throughout a go to to Hanoi in early December, Nvidia co-founder and CEO Jensen Huang known as Vietnam the chip large's “second dwelling”, promised to increase partnerships with native firms and set up a base within the nation, in line with native media studies.

Nvidia, whose market capitalization final week topped $2 trillion, says it has invested $12 million within the nation to date.

An Nvidia spokesperson declined to touch upon Nvidia's future operations in Vietnam when contacted by Al Jazeera.

Vietnam has about 5,000 engineers skilled in semiconductors, however will want 20,000 within the subsequent 5 years, in line with the US-ASEAN Commerce Council.

“When firms have a look at Vietnam, it appears to be like actually good on paper, however after they undergo to see if there may be sufficient electrical energy, what’s the infrastructure and, most significantly, how are the human assets… I don't suppose so. Vietnam goes to be the producer that it thinks it’s,” Zachary Abuza, a professor on the Nationwide Warfare Faculty in Washington, DC who focuses on Southeast Asia, instructed Al Jazeera.

Vietnamese authorities are conscious of labor shortages and are main a push to coach extra engineers, mentioned Nguyen Thanh Yen, a principal engineer on the Hanoi department of Korean chip design firm CoAsia SEMI.

“The federal government is now aggressively planning devoted packages to extend the variety of semiconductor engineers,” Yen instructed Al Jazeera.

Semiconductors had been on the heart of the historic replace in relations between Vietnam and america introduced in September, when the 2 international locations agreed to a complete strategic partnership – the best degree in Hanoi's diplomatic hierarchy.

“We’ll deepen our cooperation in vital and rising applied sciences, significantly round constructing a extra resilient semiconductor provide chain,” US President Joe Biden mentioned throughout a joint press convention on September 9 with Nguyen Phu Trong , the final secretary of the Communist Get together of Vietnam. .

US chip firms look like aligned with Washington's agenda.

Arizona-based Amkor started operations at a $1.6 billion chip manufacturing facility in North Vietnam in October, whereas Delaware-based Marvell introduced in Could that it’s going to set up a design heart of semiconductors within the nation.

Samsung Vietnam
Samsung invests $3.3 billion to fabricate semiconductor parts in Vietnam [Kham/Reuters]

South Korean firms are additionally becoming a member of the race. Samsung, Vietnam's largest investor, introduced in August 2022 that it’s going to make investments $3.3 billion to fabricate semiconductor parts within the nation.

Hana Micron Vina, which makes a speciality of chip packaging and reminiscence merchandise, has constructed a second manufacturing facility in Vietnam and plans to speculate $1 billion within the nation by 2025, in line with a Nikkei Asia report.

Chip firms are “all competing for this very small and tight job market,” Abuza mentioned. “[Vietnam] it must enhance its price of engineers 5 occasions a 12 months to do that.”

Others, like Yen, are optimistic about Vietnam's means to rise to the problem.

He mentioned the nation excels in math and science and 20 technical universities are beginning semiconductor coaching packages with the objective of getting 50,000 engineers added to the workforce by 2030.

“Vietnam has the benefit of younger and hungry human assets,” Yen mentioned. “Fields that assist generate profits extra simply are usually within the technical sectors. Semiconductors have gotten scorching proper now.”

Assist additionally comes from exterior.

Throughout his go to to Vietnam, Biden introduced $2 million in funding for coaching in Vietnam's semiconductor business.

Europe might be near collaborating, mentioned Bruno Sivanandan, co-chairman of the Digital Sector Committee on the European Chamber of Commerce Vietnam.

“There might be partnerships with academies in Europe to assist the schooling of Vietnamese employees,” Sivanandan instructed Al Jazeera. “Vietnam has such an enormous potential that isn’t but realized, so the large gamers are Vietnam.”

Nonetheless, Vietnam might not have the posh of time with regional challengers preventing for funding.

Hiep at ISEAS mentioned Malaysia and Singapore had been formidable rivals and Indonesia and Thailand had been additionally chasing the sector.

“They’re all on the lookout for a chance to ascertain their presence within the world chip provide chain,” Hiep mentioned. “It's a really, very aggressive business.”

Vietnam depends closely on hydro-dams for its electrical energy wants [Getty Images]

Vitality insecurity can also be a problem.

Throughout Vietnam's hottest summer season up to now final 12 months, locals within the north skilled intermittent blackouts. In early June, the climate was so sweltering throughout a Hanoi energy outage that some households sought refuge in a mountain cave close to the town heart.

For a number of weeks, factories in industrial parks in North Vietnam have gone darkish for hours at a time in the course of the afternoon.

“They needed to cease operations as a result of there was no energy in the course of the day for about 4 or 5 hours,” a Ho Chi Minh Metropolis-based particular person who works within the vitality sector instructed Al Jazeera. asking that his title be withheld. he had not been cleared by his firm to debate the problem.

“Samsung and different Korean factories – they had been in an enormous disaster as a result of they needed to cease their factories fully due to the dearth of electrical energy.”

Following the outages, authorities launched an investigation into EVN, the nation's state electrical energy supplier. Officers just lately disciplined 161 EVN personnel for lack of vitality.

North Vietnam is closely depending on hydroelectric dams, which might dry up in the course of the hottest months of the 12 months when demand is highest. The infrastructure is outdated and the nation “lacks the community capability and vitality assets to cope with the issue,” mentioned the vitality sector worker.

“We had invested in energy transmission and vitality assets in North Vietnam a few years in the past, however EVN, they fell behind,” he mentioned.

“In northern Vietnam, [factories] face an enormous downside associated to vitality safety.”

Vitality can also be a priority for European funding.

Beneath the phrases of the European Union's commerce cope with Vietnam, European firms doing enterprise with the nation should adjust to ever-tightening rules on carbon emissions, which may pose issues if Vietnam could be very depending on coal.

“To do enterprise with Europe, that you must meet these necessities in carbon emissions,” mentioned Sivanandan. “If we apply this to the semiconductor business, this can be a barrier.”

Abuza mentioned there’s a appreciable hole between Vietnam's potential and the fact on the bottom.

“These chip factories and server farms and all of the high-tech issues that Vietnam needs to do actually depend on very steady electrical energy and so they simply don't have it,” he mentioned. “Vietnam has a tremendous potential for traders, however there are such a lot of issues that they’ve to resolve.”

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