Vietnam Semiconductor Market Stands A Chance As Makers Avoid China
An article by CNBC quoted experts who felt the Biden’s China chip curbs are the latest in a series of upheavals prompting chipmakers to relocate production chains to neighbouring countries. It named Vietnam as one of the cost-efficient semiconductor manufacturing bases with lower levels of political challenges, despite others’ remaining hopeful of China.
U.S. curbs on chip exports to China are the latest shakeup prompting companies to consider moving some of their chipmaking capabilities to nearby Vietnam and India for semiconductor manufacturing. The number of recent queries to KPMG from clients and prospects about expanding chipmaking capabilities across Southeast Asia increased 30 — to 40 percent, compared to before the pandemic, said Walter Kuijpers, a Singapore-based partner at the professional services firm.
“Corporates are seeing merits in segregating supply chains rather than having a single point of reliance … Recent geopolitical developments are expected to accelerate these strategies that are already in motion,” said Kuijpers.
In October, the U.S. began requiring companies to obtain licenses to export advanced semiconductors or related manufacturing equipment to China. Those businesses also need Washington’s approval if they use American equipment to manufacture specific high-end chips for sale to China. That left semiconductor companies tried to find workarounds. The move to Vietnam for semiconductor manufacturing might have just been a “no-choice” situation.
Taiwanese chipmaking powerhouse TSMC and its South Korean rivals Samsung and SK Hynix reportedly obtained one-year waivers to continue sending American chipmaking equipment to their facilities in China. Dutch semiconductor toolmaker ASML said its staff in the U.S. are prohibited from providing certain services to advanced semiconductor fabrication plants, or fabs, in China.
As such, they would want to move somewhere nearby so that production and yields can be as efficient as possible, said Jan Nicholas, an executive director focusing on the semiconductor sector at Deloitte. He added Southeast Asia has become a natural choice for factories looking to relocate outside of China. Vietnam happens to be a location of choice for semiconductor manufacturing.
“When you’re making investment decisions that are that big, that have that long of a useful life for a factory, you tend to stay away from risky situations … the more uncertainty there is, the more that these companies will flee towards a greater certainty,” said Nicholas.
Southeast Asia may also be seen as more attractive than chipmaking powerhouses such as South Korea and Taiwan due to the region’s perceived neutrality amid ongoing trade tensions between the U.S. and China.
“South Korea and Taiwan can’t camouflage themselves, but countries like Vietnam, India, and Singapore are positioning themselves as a third way, a neutral bridge between two titans,” Sarah Kreps, director of Cornell University’s Tech Policy Lab, told CNBC.
Vietnam has emerged as an alternative semiconductor production base for global chip makers. The country has invested billions of dollars in investments to set up research and education centers, attracting major chipmakers to shop there. Samsung, the world’s largest memory chip maker, has reportedly committed to investing a further US$3.3 billion in the Southeast Asian country this year. The South Korean conglomerate aims to produce chip components by July 2023.
“Companies that have had manufacturing facilities in China like Samsung can invest in manufacturing alternatives that bring many of the benefits of manufacturing facilities in China but without the political baggage,” said Kreps.
What You Missed:
China EV Makers Eye Southeast Asia As Competition At Home Heats Up
Pre-Fabricate Large Workpieces With Precision
TIMTOS 2023 Welcomes International Visitors
Optomec And Acme Manufacturing Introduce The Industry’s First Fully Automated Work Cell For The Additive Repair Of Turbine Parts
Looking for the Optimum Tool
Intel’s Comeback With 3nm And 4nm Chips In 2023
Accurate Parts Evaluation With ZEISS BOSELLO MAX
Metal Cutting Technology (Water Jet) For High Risk Environments
igus Helps Companies Get Started With IoT Using i.Sense CF.Q
EV Battery Fires Preventable With Extra Lithium Salt
WANT MORE INSIDER NEWS? SUBSCRIBE TO OUR DIGITAL MAGAZINE NOW!
CONNECT WITH US: LinkedIn, Facebook, Twitter
Letter to the Editor
Do you have an opinion about this story? Do you have some thoughts you’d like to share with our readers? APMEN News would love to hear from you!
Email your letter to the Editorial Team at [email protected]