What makes Vietnam more and more attractive to Korean semiconductor giants?

DNHN - Vietnam is emerging as a new source of demand for Korean companies' semiconductors as the nation emerges as a global IT equipment manufacturing hub.

In a recent report by the Bank of Korea (BOK), the Korea Times reports that Vietnam is emerging as a major market for Korean semiconductor manufacturers, who are experiencing difficulties due to high demand. China's chip production slows.

Amid escalating tensions between the United States and China, BOK emphasised the significance of diversifying export markets for Korean semiconductor giants such as Samsung Electronics and SK Hynix.

Vietnam is emerging as a new market for Korean companies' semiconductors, as the country becomes an international production hub for information technology (IT) equipment, according to the report. able to supplant China in the future".

"Vietnam, in particular, is home to the production bases of major smartphone manufacturers at present. Vietnam uses Korean semiconductors as intermediates to produce finished IT products. - the report was expanded.

The report notes that Vietnam's abundant low-wage labour force and easy access to the Chinese market are motivating multinational corporations, such as those from South Korea, to establish production facilities in this Southeast Asian nation.

The revitalization of the Vietnamese economy is a further cause for optimism. Despite the fact that Vietnam's economy slowed for a time due to the COVID-19 pandemic, it has recovered strongly and posted 8% growth last year. In addition, the country in Southeast Asia generated the largest trade surplus for South Korea in 2017.

The future of the semiconductor industry in Vietnam is very bright. In December, Samsung opened a $220 million research and development (R&D) centre in Hanoi and announced plans to mass produce chips in Vietnam in 2018.

In the midst of the trend towards the restructuring of the global semiconductor industry, not only Korea, but also Vietnam is making a greater impression. Nikkei Asia reported earlier this year that American computer manufacturer Dell Corporation intends to stop using Chinese-made chips by 2024. In addition to chips, Dell has requested components such as electronic modules and printed circuit boards, as well as product assemblers in countries besides China, such as Vietnam. According to international media reports, Apple intends to expand some production operations to Vietnam.

In the meantime, CNBC recently reported that Vietnam and India have emerged as two potential destinations for the shifting of the production chain of semiconductor components. Bloomberg reported in April that Vietnam, Thailand, Cambodia, and India were taking advantage of U.S. actions to secure their semiconductor supply chains.

My Linh (t/h)