Over the last couple of years, global semiconductor makers have been betting on Vietnam as their next production destination for the chip industry. The country is preferred by big semiconductor players like Samsung and Intel for its favorable demographics with relatively low labor costs and human resources. But the time has come for Vietnam to climb up the supply chain as the country’s leading tech giant FPT Software just made its foray into the semiconductor space.
Earlier this week, FPT Software announced that it has formed a new subsidiary, FPT Semiconductor, marking the company’s entry into the booming semiconductor industry. The aim is to gain a slice of Asia Pacific’s semiconductor market which accounts for 60% of global sales. FPT Semiconductor has in fact released its first integrated circuits (ICs), which were designed in Vietnam and manufactured in South Korea, in August 2022.
For context, an IC, sometimes called a chip, microchip or microelectronic circuit, is a semiconductor wafer on which thousands or millions of tiny resistors, capacitors, diodes and transistors are fabricated. According to FPT, those ICs will be used in Internet of Things (IoT) medical devices. By 2023, FPT Semiconductor plans to supply 25 million chips globally to meet diverse needs in telecommunications, IoT, automotive technology, energy, electronics, and others.
FPT Semiconductor’s founder and CEO Nguyen Vinh Quang, in a statement said, the company is looking forward to contributingto the development of the fast-growing semiconductor industry in Vietnam and Asia on a broader scale. “FPT Semiconductor looks to become the chip supplier of choice for businesses in Vietnam and further in Japan, Korea, Taiwan, China, the US, and Europe” he said.
The company’s foray into the semiconductor industry for chip making comes 23 years after leading in IT services and solutions in Vietnam. Considering that worldwide semiconductor revenue is expected to reach US$661 billion in value by this year, according to IDC, it’s only timely for Vietnam to move up the value chain.
Chips are up for Vietnam’s semiconductor industryJust recently it was reported that the world’s largest memory chipmaker, Samsung, will begin making semiconductor parts in Vietnam in July 2023. The South Korean giant is apparently testing ball grid array products and intends to mass produce them at the Samsung Electro-Mechanics Vietnam factory in northern Thai Nguyen province. This comes after Samsung, earlier this year, poured another US$920 million into its electronic components plant in Thai Nguyen.
Till date, Samsung is Vietnam’s biggest foreign direct investor, first investing US$1.3 billion in the electro-mechanics unit in 2013, which produces mainboards and other electronic components. Last year, the number climbed to US$18 billion. The electronics giant also has six plants in the country and is building a new research and development center in the capital Hanoi.
Before Samsung, Vietnam had Intel Products Vietnam (IPV), the largest assembly and testing plant in Intel’s network. The complex has received more than US$1.5 billion over the past 15 years from the components industry giant, which makes the manufacturing plant one of Intel’s largest factories. Intel also committed to spend US$475 million last year, to build a cutting-edge microelectronics testing and assembly facility in Vietnam.
During the global chip crisis, IPV maintained stable operations and made several innovative contributions to help fill the semiconductor shortage. Other chipmakers, including Qualcomm, Texas Instruments, SK Hynix, and NXP Semiconductors have also built research centers and factories in Vietnam. Then there is Hayward Quartz Technology, a large OEM supplier, that had secured approval earlier this year, to construct a US$110 million plant in Vietnam. Once up and running, the site will make crystal silicon blocks, plastic polymers, and other materials used in microelectronics fabrication.
Even Pegatron, one of Apple’s EMS providers, spent US$22.9 million to buy land in Vietnam. The corporation intends to invest a further US$1 billion to establish significant production capacity in the area.Tow other Apple device assemblers, Foxconn and Wistron, have plans in the pipeline to expand its footprint in Vietnam.
FPT Software, through FPT Semiconductor, aims to tap into Asia Pacific’s chip market with plans to supply 25 million chips globally by 2023.