Nguyen Thi Thuy Chung, LL.M.,
Senior Partner, ASL LAW
 |
| Participants in a ceremony announcing the cooperation between the National Innovation Center, the Semiconductor Industry Association, and partners to develop the semiconductor industry in Vietnam__Photo: Tuan Anh/VNA |
The Government on the last day of 2024 issued Decree 182/2024/ND-CP (the Decree) regulating the establishment, management and use of the Investment Support Fund, with a primary focus on promoting research and development (R&D) in the semiconductor and artificial intelligence (AI) sectors. The decree aims to accelerate innovation, enhance technological capacity, and position Vietnam as a leading hub for hi-tech industries in the region.
The significance of this topic cannot be overstated, as semiconductors and AI are the driving forces behind the Fourth Industrial Revolution. The enactment of the Decree underscores the Vietnamese Government’s commitment to keeping pace with global technological advancements and strengthening the nation’s competitiveness in the digital age.
Vietnam - the hub for semiconductor and AI development
The growing emphasis on semiconductor and AI development in Vietnam stems from the realities of globalization and technological competition. Semiconductors serve as the backbone of modern electronic devices, while AI is a foundation technology enabling automation and advanced data analytics. To avoid being left behind in the global supply chain, Vietnam must actively integrate into the semiconductor value chain and invest in AI-driven innovations.
According to data from Statista Market Insights, Vietnam’s domestic semiconductor market revenue is expected to reach USD 31.39 billion by 2029, with a compound annual growth rate (CAGR) of 11.48 percent during the 2024-29 period[1].
Domestically, Vietnam’s booming electronics, telecommunications and information technology industries generate an increasing demand for a stable semiconductor supply and cutting-edge AI solutions. This demand highlights the necessity of developing local capabilities to support industrial growth and technological self-sufficiency.
National security considerations further reinforce the importance of semiconductor and AI development. By reducing dependence on foreign technology, Vietnam can safeguard its economic stability and defense capacity. Achieving technological autonomy in these strategic sectors ensures resilience against potential global supply chain disruptions and geopolitical uncertainties.
Consequently, with the ambition to position Vietnam as a leading hub for the semiconductor industry regionally and globally, the Vietnamese Government has recently issued the Vietnam Semiconductor Industry Development Strategy through 2030, with a vision toward 2050, along with various incentive policies to promote investment and business growth in the semiconductor sector as well as the next-generation electronics industry (AI chips)[2].
Despite these changes, Vietnam still faces significant challenges in advancing its semiconductor and AI industries. One of the most pressing issues is the shortage of highly skilled professionals in these fields, resulting from its strict policy on employing foreign experts. Moreover, the country’s technological infrastructure and R&D ecosystem remain less developed compared to major players such as China, South Korea, and Taiwan. Fierce competition from these nations further complicates Vietnam’s efforts to establish itself as a formidable force in the semiconductor market.
This is demonstrated clearly through the fact that although the country’s semiconductor ecosystem has expanded to cover all three critical stages of the value chain, including designing, manufacturing and packaging, most of these activities are currently dominated by foreign enterprises.
As Vietnam moves forward with the implementation of the Decree, addressing these challenges will be critical to realizing its ambition of becoming a hi-tech powerhouse in the region. Strategic investments in education and infrastructure, and policy incentives will be essential in navigating the complexities of the global technology landscape.
That being said, Vietnam has long been recognized as a potential market for assembly, testing and packaging, thanks to the presence of manufacturing facilities from major corporations such as Intel, Samsung, and Hana Micron[3].
For example, Samsung Group has chosen Vietnam as the base to build its largest mobile phone factory, and also the production site for many other electronic products including refrigerators and televisions. South Korea’s LG Group also built large production facilities in Hai Phong city, focusing on consumer electronics products such as televisions and other electronic home appliances. Taiwan’s Foxconn Group, the world’s largest electronics manufacturer, which assembles products for Apple and many other major brands, has invested more than USD 3 billion to build many electronics factories in Vietnam[4].
Hence, although there will be many obstacles ahead, Vietnam’s starting point is not the deep bottom of the sea as many international organizations believe.
Highlights of the Decree: financial support for R&D in Vietnam
According to the Decree, the Investment Support Fund is a national fund established by the Government and assigned to the Ministry of Planning and Investment for management.
The Fund operates for not-for-profit purposes, not for preserving its financial resources. The Fund’s tasks are to support enterprises according to the eligible subjects, conditions, contents and levels specified in the Decree.
Considering that attracting investment in strategic areas, including high technology, semiconductors, AI, and innovation, etc., has become a top priority for many countries. Vietnam has adapted to the global trend and is creating many incentive mechanisms and policies to ensure sustainable development.
In particular, the annual cost support from the Investment Support Fund applies to four groups of subjects: hi-tech enterprises; enterprises with hi-tech product manufacturing projects; enterprises with hi-tech application projects; and enterprises with R&D center investment projects[5].
Positioning itself as an emerging hub for hi-tech industries, with a particular focus on semiconductors and AI, Vietnam provides significant financial incentives to enterprises engaged in cutting-edge research, offering up to 50 percent support for initial investment costs in semiconductor and AI projects[6].
However, to qualify for this support, projects must demonstrate their contribution to Vietnam’s innovation landscape and possess the potential for breakthrough technological development.
Vietnam’s commitment to R&D is reflected in the eligibility criteria set forth by the Decree. To ensure financial discipline and long-term investment viability, enterprises must have no outstanding tax or budget debts. Additionally, they must commit to a minimum investment of VND 3 trillion, with at least VND 1 trillion disbursed within the first three years[7].
These requirements aim to attract serious investors who are capable of making substantial contributions to the country’s technological progress. Furthermore, projects must align with Vietnam’s priority hi-tech industries, operating in R&D activities that aim to create high technologies on the List of high technologies prioritized for development investment, and hi-tech products on the List of hi-tech products promoted for development issued together with the Prime Minister’s Decision[8].
This requirement aims to reinforce the Government’s strategic direction in developing a sustainable and globally competitive technology sector. Other financial supports for enterprises engaged in semiconductor production and AI development are various, nonetheless, all with strict conditions[9].
Beyond direct financial support, the Decree also introduces various initiatives to assist hi-tech enterprises. Companies involved in semiconductor and AI development can access funding for workforce training, infrastructure investment, and production of hi-tech products.
By implementing the Decree, Vietnam is taking a decisive step toward enhancing its position in the global hi-tech landscape. Through targeted financial assistance and strategic policy measures, the country aims to cultivate a dynamic environment where innovation flourishes, attracting both domestic and international enterprises to invest in the next generation of technological advancements.
Challenges in implementing the Decree
While the Decree represents a bold step toward fostering technological innovation in Vietnam, its practical implementation faces significant challenges. One of the foremost obstacles is the shortage of high-quality human resources in the semiconductor and AI sectors, leading to international enterprises being discouraged from investing in Vietnam.
Despite Vietnam’s growing emphasis on technology education, the industry still lacks skilled engineers and researchers capable of driving large-scale R&D projects[10]. Additionally, the required substantial initial investment poses a barrier, particularly for small- and medium-sized enterprises (SMEs), which are likely to struggle to secure the necessary funding to meet the stringent financial commitments set in the Decree.
Beyond resource limitations, legal and administrative hurdles further complicate the implementation process. The procedures for project approval and fund disbursement can be complex and time-consuming, potentially deterring investors who seek efficiency and predictability.
Moreover, the Decree imposes strict requirements on transparency and financial disclosure, which could place a significant administrative burden on enterprises in the context that it is necessary to ensure accountability. These factors may slow down the pace of investment and limit the number of enterprises willing to engage.
Vietnam also faces intense global competition in attracting investment in the semiconductors and AI sectors. Many other nations are aggressively expanding their hi-tech sectors with high value-added electric vehicle and electronics segment, the most invested in ASEAN countries in 2024, offering lucrative incentives to multinational corporations and research institutions[11].
In this competitive landscape, Vietnam should not only provide financial support but also create an enterprise-friendly environment that enhances investor confidence. Without streamlined regulatory processes and additional incentives, the country may struggle to stand out as a preferred destination for hi-tech investment.
Lastly, the inherent risks of technology development pose another challenge. R&D projects, particularly in advanced fields like semiconductors and AI, often have high failure rates and require long-term commitment before yielding commercial success. This uncertainty necessitates sustained financial and policy support from the Government, as well as patience from investors. Without a clear long-term strategy, many enterprises may hesitate to take on the risks associated with pioneering new technologies.
Despite these challenges, the Decree remains a crucial policy tool for advancing Vietnam’s technological ambitions. However, to fully realize its potential, the Government should address these practical difficulties by enhancing workforce development, simplifying administrative procedures, and providing additional support mechanisms to sustain innovation in the long run.
Future prospects: the potential impact of the Decree
Despite the challenges in implementation, the Decree presents significant opportunities for Vietnam’s hi-tech sector. By providing substantial financial support and fostering an innovation-driven ecosystem, the Decree has the potential to attract large-scale investments from both domestic and international enterprises.
This influx of capital could accelerate the development of Vietnam’s semiconductor and AI industries, positioning the country as a key player in Southeast Asia’s technological landscape. If effectively implemented, the Decree could transform Vietnam into a regional hub for semiconductor manufacturing and AI R&D, enhancing its global competitiveness in the hi-tech sector.
Beyond its impact on industry growth, the Decree promises substantial economic benefits. The expansion of semiconductor and AI industries is expected to generate thousands of high-quality jobs, creating new employment opportunities for engineers, researchers, and skilled workers. This would, in turn, contribute to generating higher income levels and improving living standards for Vietnamese citizens. Additionally, the policy’s emphasis on R&D and technological advancement will accelerate digital transformation across various sectors, fostering the development of supporting industries such as electronics manufacturing, automation, and software engineering. By strengthening these interconnected industries, Vietnam can create a more resilient and diversified economy.
For long-term success, the Decree must be accompanied by a comprehensive and sustainable innovation ecosystem. This requires close collaboration between the Government, enterprises, and research institutions to ensure continuous technological advancement and knowledge transfer.
A well-integrated approach will not only support the initial stages of R&D but also facilitate commercialization, enabling Vietnamese enterprises to bring cutting-edge innovations to the global market. Moreover, synchronized policy measures should be developed to support enterprises beyond the R&D phase, including incentives for production scaling-up, market expansion, and intellectual property protection.
While challenges remain, the Decree marks an important milestone in Vietnam’s ambition to become a leader in hi-tech industries. By addressing the existing obstacles and reinforcing long-term policy commitments, the Vietnamese Government can unlock the full potential of this initiative, paving the way for sustainable economic growth and technological leadership in the region.
If Vietnam continues to invest in human resources, infrastructure, and policy innovation, the country could establish itself as a formidable force in the global semiconductor and AI industries.-
[1] Ngo Huyen. “Cong nghiep ban dan Viet Nam buoc vao thoi ky khoi sac moi.” VnEconomy, November 11, 2024, https://vneconomy.vn/cong-nghiep-ban-dan-viet-nam-buoc-vao-thoi-ky-khoi-sac-moi.htm.
[2] Prime Minister’s Decision 1018/QD-TTg of 2024 promulgating the Strategy for development of Vietnam’s semiconductor industry through 2030, with a vision toward 2050.
[3] My Chau. “Hana Micron cua Han Quoc dau tu 1 ty USD vao san xuat chip tai Viet Nam.” VnBusiness, October 2, 2023, https://vnbusiness.vn/the-gioi/hana-micron-cua-han-quoc-dau-tu-1-ty-usd-vao-san-xuat-chip-tai-viet-nam-1095722.html.
[4] Ngoc Diep. “Tu chuyen tap doan Han Quoc rot 8 ty USD vao Viet Nam.” PLO, October 17, 2024, https://plo.vn/tu-chuyen-tap-doan-han-quoc-rot-8-ti-usd-vao-viet-nam-post815209.html.
[5] Gia Nguyen. “Nghi dinh 182/2024/ND-CP: Nen tang thuc day phat trien cac linh vuc chien luoc.” Dien dan Doanh nghiep, January 25, 2025, https://diendandoanhnghiep.vn/nghi-dinh-182-2024-nd-cp-nen-tang-thuc-day-phat-trien-cac-linh-vuc-chien-luoc-10149466.html.
[6] Articles 24 and 26.1 of the Decree.
[7] Article 16.6.c of the Decree.
[8] Article 16.6.b of the Decree.
[9] Articles 19 thru 23 of the Decree.
[10] According to Bao Cong Thuong. “Loat ‘ong lon’ do bo, nganh ban dan Viet Nam lam gi chop thoi co?” Tap chi Tai chinh, July 13, 2024, https://tapchitaichinh.vn/loat-ong-lon-do-bo-nganh-ban-dan-viet-nam-lam-gi-chop-thoi-co.html.
[11] Khanh Lan. “Nam 2025, nhung linh vuc nao o ASEAN thu hut manh von FDI?” Thoi bao Kinh te Sai Gon, December 30, 2024, https://thesaigontimes.vn/nam-2025-nhung-linh-vuc-nao-o-asean-thu-hut-manh-von-fdi/.
