The global semiconductor manufacturing market potential is huge. However, according to VIRAC’s report, in the second quarter of 2023, semiconductor production in Vietnam dropped sharply (only by nearly half of the same period last year).
Semiconductor Manufacturing Industry Overview 2023
Global semiconductor manufacturing industry:
The market size of the semiconductor manufacturing industry is very large:
The semiconductor industry is valued at $585.56 million in 2022 and is expected to reach $1087.12 billion by the end of 2023-2028. This result is based on a projected compound annual growth rate (CAGR) of 10.86% over the forecast period (2023-2028).
Source: General
However, the global semiconductor manufacturing industry in the first months of 2023 faced many difficulties due to the imbalance between supply and demand. 2023 is a year of many changes for the whole world. Global political and macroeconomic factors are the driving forces behind the semiconductor industry.
Rising interest rates, high inflation lead to tightening consumer spending, they limit investment in expensive technology products. Semiconductors are considered the main raw material for the production of chips – an important component of high-tech products. Cutting people’s spending on technology products has reduced demand for semiconductors.
Besides, the technology-led stock market is facing many difficulties. This has led to a significant drop in the market capitalization of this industry group. The aggregate market capitalization of the top 10 global chip companies fell 34% from $2.9 trillion in November 2021 to $1.9 trillion in November 2022.
Semiconductor manufacturing industry in Vietnam:
Most semiconductor factories in Vietnam have foreign capital, so semiconductor production in Vietnam is completely dependent on the world semiconductor market. Jointly affected by global difficulties, semiconductor production output in Vietnam also declined.
Source: VIRAC’s report
According to VIRAC’s report, in the second quarter of 2023, semiconductor production in Vietnam dropped sharply (only by nearly half of the same period last year).
Specifically, semiconductor production in Vietnam’s provinces declined sharply. Production output fell the most in Dong Nai. According to the report of VIRAC, in the same period of 2022, semiconductor production output in this province fell by nearly half.
Hoa Binh is the locality with the lowest decline in semiconductor production output. However, according to VIRAC’s report, the output in this province is only ¾ of the same period last year.
Long An and Binh Duong also recorded a deep decline in semiconductor production output.
The global semiconductor market potential is huge
Although the first months of 2023, the semiconductor market is difficult due to falling demand and difficulties in production costs. But there’s no denying that semiconductors are still an industry important in the economic and political development of each country.
The potential for semiconductor consumption is driven by the intensification of 5G deployment and the growing demand for technology devices.
In order to promote the global economy into the era of digital transformation, artificial intelligence and 5G communication, high-tech digital products will be increasingly invested in development. Revolutionary applications such as virtual reality, Internet of things, Industry 4.0 and self-driving cars will quickly be commercialized. The above signals show that the demand for semiconductors for modern devices to develop revolutionary industries is increasing.
Source: General
5G – the fifth generation of wireless technology for digital mobility is being developed across countries. This is driving huge potential for high-tech companies to develop 5G connected devices and smart products.
Demand for semiconductors will increase as semiconductors are at the core of making chips for these devices and products.
The sensor segment is expected to drive the semiconductor market potential:
The growth rate of sensor devices is forecasted to increase sharply in the future. Currently, the demand for smart sensors in IoT-based devices and consumer electronics is increasing. In manufacturing, the use of sensors in process improvement is also increasingly common. For car production, using sensors to bring safety and comfort to users is being applied on high-end product lines.
Besides, sensors are an important part of factory automation in the Industry 4.0 era. When Industry 4.0 is applied to production is increasing rapidly globally, so is the demand for automation equipment. In Vietnam, the application of Industry 4.0 in production processes has improved labor productivity, reduced time and optimized costs.
All these signals show the long-term potential of the semiconductor manufacturing industry globally in general and Vietnam in particular.
Prospects for the development of semiconductor manufacturing industry in Vietnam
Vietnam is a potential country to invest in the semiconductor manufacturing industry (vision 2023-2028) because:
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Low labor cost
In Vietnam, the cost of living is lower than in other countries like Taiwan and China. At the same time, the cost of setting up a factory in Southeast Asia is also cheaper than other regions. This helps reduce the cost of investing in Vietnam significantly.
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Stable security
Compared to other countries with similar cheap labor resources, Vietnam’s political situation is considered the most stable. This reduces the risks of terrorism and factory destruction for the business.
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There are many policies to support investment from the government
Another point is that the semiconductor manufacturing industry is particularly interested in by the Vietnamese government. The Vietnamese government understands the importance of semiconductors in economic and political development and has introduced various measures to develop this industry. Typically, businesses investing in this field can be exempted from land and water tax.
The Vietnamese government has established many funds to support the semiconductor industry. The National Technology Innovation Fund (NATIF), established on August 5, 2011 has provided funding for research and development activities in many technology industries, including semiconductor manufacturing.
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Favorable geographical location
Vietnam has a strategic geographical position in the logistics activities of the country branch semiconductor manufacturing. In the central location of Southeast Asia and Vietnam are strategic locations for investors who want to penetrate the market in this region. At the same time, Vietnam is close to China and has a long coastline, which makes it easy for Vietnam to participate in the world’s leading supply chain.
Currently, the world’s major semiconductor manufacturing enterprises have invested in Vietnam
Intel Corporation, Samsung Electronics… are the world’s leading semiconductor manufacturing enterprises that have invested in Vietnam. Realizing the return on investment, businesses continue to pour capital and expand production scale in our country.
Hanmi Semiconductor – a large chip manufacturing company of Korea, at the end of May, officially announced the opening of the Hanmi Vietnam Branch based in Bac Ninh province comes into operation.
In early June 2023, Infineon Technologies AG (Germany’s largest company specializing in semiconductor solutions for power and IoT systems) also announced the expansion of operations in Vietnam. At the same time, the company also set up an electronic chip and semiconductor development team working in Hanoi.
Samsung Electronics increased its investment capital in Vietnam to 20 billion USD. Continue to expand investment in production and fields of artificial intelligence, high technology, and semiconductors.
Intel increased the investment capital of semiconductor manufacturing projects in Vietnam to nearly 1.5 billion and is planning to pour billions more dollars to expand the scale of the factory in Vietnam.
See related articles:
ELECTRONIC COMPONENTS INDUSTRY OVERVIEW FIRST HEAR OF 2023 – SIGNIFICANT DECREASE YOY?
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The above information is partly summarized in “Report on electronic components industry Q2/2023“. The report not only provides full information on macroeconomics, trade supply and demand of the semiconductor manufacturing industry, but also provides detailed information on the electromagnetic component manufacturing industry.
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