Vietnam’s semiconductor industry has witnessed remarkable growth and transformation, evolving into a promising destination for global investors. This guide explores the legal framework and investment climate, offering essential insights for stakeholders in this high-tech sector.

Introduction

Vietnam’s semiconductor journey began in 1979 with the establishment of the Z181 factory, producing components for Eastern European markets. Despite disruptions during the 1990s due to geopolitical and economic challenges, the sector regained momentum in the 2000s.

Today, Vietnam’s semiconductor industry benefits from government-backed initiatives, strategic global partnerships, and its geographical proximity to major semiconductor hubs like China, Japan, and South Korea. As of December 2024, the country has attracted 174 foreign-invested projects worth $11.6 billion, underscoring Vietnam’s rising role in the global semiconductor value chain.

Read more about Vietnam’s semiconductor industry potential here.

Current State of Vietnam’s Semiconductor Industry

Vietnam is making strides across all segments of the semiconductor value chain:

  • Design and R&D: Companies like Renesas, Synopsys, and Marvell contribute to Vietnam’s presence in the global chip design market.
  • Manufacturing, Packaging, and Testing: Major players like Intel and Amkor have established facilities in Vietnam.
  • Domestic Innovations: The first Vietnamese-designed IC chip by FPT Semiconductor in 2022 set a new milestone, with further investments in AI-driven chip manufacturing.

Key Advantages of Vietnam’s Semiconductor Sector

1. Strategic Location

Vietnam’s proximity to major markets in East Asia positions it as a key player in the global supply chain.

2. Competitive Workforce

  • A young, skilled labor force is a significant advantage, with 5,000 semiconductor engineers in 2024 and a government-backed goal to train 50,000 engineers by 2030.
  • Competitive labor costs provide an edge over aging workforces in Japan and South Korea.

3. Government Support

Vietnam’s government has committed to fostering the semiconductor industry through the National Semiconductor Development Strategy (2024–2030), focusing on:

  • Selective foreign investment to develop foundational capabilities.
  • Incentives for R&D, technology transfer, and high-tech enterprises.

For an article on investment policy for the semiconductor industry in Vietnam in 2025, you can refer to the following links.

4. Trade Agreements and Market Access

Vietnam’s participation in agreements like CPTPP, EVFTA, and ASEAN free trade pacts enhances its appeal as a low-tariff production base.

5. Natural Resources

Vietnam boasts the world’s second-largest rare earth reserves, critical for semiconductor production.

Importance of Understanding Legal Framework

A thorough understanding of Vietnam’s legal framework is essential for navigating the investment process successfully and ensuring compliance with all relevant regulations.

Legal Foundation

Investment Law Framework

Vietnam’s Law on Investment provides the foundation for foreign direct investment (FDI) in the semiconductor sector, addressing:

  • Investment Registration: Compulsory for all foreign investors.
  • Capital Requirements: Based on project scale.
  • Ownership Limits: Open for most high-tech sectors, with restrictions in sensitive areas.
  • Investment Protections: Guarantees against expropriation and policy changes.

High-tech Industry Regulations

The semiconductor industry benefits from its classification as a high-tech sector according to Decision No. 38/2020/QD-TTg, with incentives for:

  • Enterprise Certification: High-tech firms receive tax and land use incentives.
  • Technology Transfer: Encouraged through favorable IP protection laws.
  • R&D Activities: Supported via grants, tax exemptions, and access to research facilities.

Investment Licensing Process

Basic Requirements

Investors must meet several fundamental requirements to obtain investment licenses:

  • Financial capacity proof
  • Technical expertise documentation
  • Environmental impact assessment
  • Project feasibility study

Special Conditions for Semiconductor Projects

Semiconductor projects are subject to additional requirements:

  • Advanced technology verification
  • Environmental safety standards
  • Skilled workforce development plans

Investment Incentives

Tax Benefits

Vietnam offers significant tax incentives to semiconductor investors (Article 13, 14 of the Law on Corporate Income Tax), including:

  • Corporate Income Tax Reductions: Up to 50% for high-tech projects.
  • Import Duty Exemptions: For production equipment and materials.
  • VAT Incentives: Applied to high-tech R&D and manufacturing activities (Clause 2, Article 9 of the Law on Value Added Tax)

Land Use Preferences

Long-Term Leases: Up to 70 years in industrial zones (Article 204 of the Land Law)

Reduced Rental Fees: For certified high-tech enterprises (Clause 1, Article 13, Decree 13/2019/ND-CP)

Infrastructure Support: Access to advanced utilities and transport in tech parks like Hòa Lạc and Saigon Hi-Tech Park.

Technology Transfer Regulations

Technology transfer in semiconductor projects must comply with specific regulations:

  • Technology transfer agreement registration
  • IP rights protection measures
  • Technical standards compliance requirements

Environmental Compliance

Semiconductor manufacturing must adhere to strict environmental standards (Article 30,32 of the Law on Environmental Protection):

  • Waste Management: Safe disposal of hazardous materials.
  • Chemical Handling: Compliance with chemical storage and use protocols.
  • Monitoring: Regular environmental audits.

Labor Regulations

Key labor requirements include (according to the labor code in articles 134, 151, 166):

  • Training Requirements: Companies must contribute to workforce upskilling.
  • Employment of Foreign Experts: Subject to work permit and visa regulations.
  • Safety Standards: Adherence to stringent occupational health and safety norms.

Conclusion and Future Outlook

Vietnam’s legal framework, bolstered by strategic policies and competitive advantages, positions the country as a compelling destination for semiconductor investment. Key takeaways for investors include:

  1. A thorough understanding of Vietnam’s regulatory landscape is essential.
  2. Leveraging government incentives can significantly reduce operational costs.
  3. Compliance with environmental and labor laws is critical for long-term success.

Vietnam’s journey toward becoming a global semiconductor powerhouse is gaining momentum, with ambitious goals for 2030 and beyond. By fostering innovation, enhancing infrastructure, and building a skilled workforce, Vietnam is set to play a transformative role in shaping the future of the global semiconductor industry.

Harley Miller Law Firm “HMLF”

Head office: 14th floor, HM Tower Building, 421 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.

Phone number: +84 937215585

Email : [email protected]

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