Semiconductors

Seeking China Hedge, Top US Chip Firms to Join Biden in Vietnam

 

Leading US chip firms are set to join President Joe Biden on his visit to Vietnam, as Washington looks to upgrade ties with Hanoi, with a focus on semiconductors and critical minerals.

Biden, who reached Hanoi on Sunday, plans to formally elevate relations with the former US foe, half a century after a lengthy and brutal war. Chips are expected to be a focal point of the trip.

Washington sees the Southeast Asian manufacturing dynamo as a key “friendshoring” destination for its strategy on securing global supply chains from China-related risks and cutting the US semiconductor industry’s exposure to the world’s second-largest economy.

 

Also on AF: Vietnam Chip Engineer Shortage May Spoil US Plan to Rival China

 

Senior executives from chipmakers including Intel, GlobalFoundries, Amkor and Marvell are expected to attend a business meeting on Monday in Hanoi, sources said, along with top US officials, including Secretary of State Antony Blinken.

The roundtable has not been announced, and is still being arranged. It is unclear whether announcements will be made by any of the companies attending the meeting which, one of the sources said, would involve about 30 top executives and officials.

Executives from tech firms such as Google and Boeing are also among expected attendees, according to a partial list seen by a person familiar with the plans.

The meeting will also see the participation of Vietnamese tech firms such as FPT, and top Vietnamese officials.

 

 

CHIPS Act funding in play

Some of the US chipmakers on the list have already invested or announced investments in Vietnam.

Intel has a $1.5 billion factory in southern Vietnam for assembling, packaging and testing chips, the biggest in its global network, and has had plans to expand it.

Amkor is building “a state-of-the-art mega factory for semiconductor assembly and testing” near Hanoi, Treasury Secretary Janet Yellen said on a visit in July. The company has dozens of open positions on its Vietnam web page.

Chip designing firm Marvell has said it plans to build a “world-class” centre in Vietnam.

The US is also expected to provide more support to train skilled workers, as a shortage of engineers in Vietnam could slow the industry take-off.

US officials have repeatedly said that Vietnam was likely to grow faster in the assembling and designing segments of the chipmaking industry.

It is, however, unclear how significant the US administration’s contribution to Vietnam’s chip sector could be, having only $100 million a year for five years available under the CHIPS Act to support global semiconductor supply chains. A large part of it could go to Vietnam, officials said.

 

Vietnam’s first chip fab

Vietnam, a major exporter of smartphones and electronics, also aims to build its own chipmaking factories, or fabs. GlobalFoundries is specialised in making integrated circuits on wafers for smartphones, cars and other applications.

An executive at a major US chips firm said the Vietnamese government had been holding meetings with most major chips companies in the country, including Intel, Samsung and Qualcomm, to ask for advice on setting up the country’s first fab.

 

Reuters graphic

 

US officials have also said an upgrade of formal ties with Vietnam could help collaboration on artificial intelligence (AI), a sector in which Google is a major global player.

Vingroup, Vietnam’s largest conglomerate and the parent of Nasdaq-listed electric car maker VinFast, has a unit focussed on AI.

 

Rare earths also in focus

Another key issue for the US is strengthening supply chains of critical minerals, especially rare earths, of which Vietnam has the world’s largest deposits after China, according to US estimates, officials said.

An agreement on rare earths was expected during Biden’s visit, two people familiar with the plans said. Details, however, are scant.

Past attempts by US companies to partner with Vietnamese rare earth firms have not succeeded, according to a person involved in one recent plan.

Trade may also be discussed, as Vietnam’s trade surplus with the US trails only those of China and Mexico.

US plans to boost Vietnam’s global role in different segments of chipmaking come amid Washington’s intense technology and trade war with Beijing, with ties between the two superpowers soured over a wide range of issues.

 

 

‘Elevating ties’

The US plans to formally elevate Vietnam to the same diplomatic tier as China and Russia, Jon Finer, the US principal deputy national security adviser, told reporters on Sunday. The upgrade will include a security dimension, Finer noted.

An action plan will be adopted during Biden’s visit, with chips as a centrepiece, adding concrete deliverables to the diplomatic upgrade, a US official said.

Many see the upgrade so far as symbolic because the Washington already effectively has close ties with Hanoi.

Meanwhile, Vietnamese officials have shown optimism about the expected upgrade, despite initial concerns over how giant neighbour China would react.

Biden’s visit, which ends on Monday, comes as a long-simmering territorial dispute between Vietnam and China heats up in the South China Sea.

Top Chinese officials, possibly including President Xi Jinping, are also expected to visit Vietnam in the coming days or weeks, officials and diplomats said, as Hanoi seeks to maintain good relations with all superpowers.

 

  • Reuters, with additional editing by Vishakha Saxena

 

Also read:

Rare Earth Magnet Firms Plan Vietnam Plants as China Hedge

Chinese Energy Storage, Battery Firms Plan $1bn Vietnam Plants

Vietnam Power Cuts Hit Samsung, Foxconn, Canon Factory Hubs

Apple MacBook Manufacturer Quanta to Build Vietnam Factory

Vietnam’s Economy Hits Fastest Growth Rate Since 1997

Vietnam, India Ramp up US Exports as China Share Falls – Caixin

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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