Riding the AI Chip Wave: Vietnam’s Path to a Global Semiconductor Powerhouse

Powered by surging AI adoption, AI chips have become critical infrastructure for data‑intensive applications in sectors like automotive and healthcare, even as the global semiconductor industry grapples with talent shortages, supply‑chain shocks and geopolitical restrictions. Against this backdrop, Vietnam is emerging as a strategic hub, combining aggressive semiconductor workforce development, generous government incentives, political stability, deepening ties with major economies—especially the US—and a fast‑growing AI ecosystem led by players such as FPT. By continuing to invest in education, R&D and AI‑chip capacity while mobilizing local enterprises, Vietnam is poised to evolve from a latecomer into a pivotal node in the global semiconductor value chain.

Written by

Nguyen Vu Quynh Trang

Published on

October 04, 2024

As demand for Artificial Intelligence (AI) solutions accelerates, semiconductors have taken on unprecedented importance, powering the rapid rise of AI chips across industries.

At the same time, global semiconductor companies are entering a period of uncertainty, challenged by issues such as talent shortages and supply chain disruptions. Within this shifting landscape, Vietnam is gaining prominence on the global innovation map and is increasingly viewed as a potential key player in helping the industry navigate the semiconductor storm.

What Are AI Chips and Why Do They Matter?

AI chips are specialized processors designed to handle the massive, data‑intensive workloads of modern Artificial Intelligence, delivering far higher speed and efficiency for training and inference than traditional hardware. As AI is embedded across industries, these chips are becoming essential to scale applications cost‑effectively and in real time.

The rapid advancement of Artificial Intelligence (AI) has transformed industries and economies worldwide, enabling a wide range of applications with unprecedented speed and precision. As AI becomes deeply integrated into more sectors, the need for enhanced performance and scalability is inevitable. However, developing and deploying AI systems requires immense computational power, which in turn drives demand for more sophisticated hardware solutions.

This evolving landscape has given rise to AI chips — purpose‑built hardware optimized for AI workloads. Designed to be more efficient for AI‑specific tasks, AI chips deliver superior performance for both training and inference of AI algorithms.

Key Performance Advantages of AI Chips

Compared to traditional, general‑purpose hardware, AI chips offer several critical performance advantages for AI applications:

Computation speed: Unlike traditional hardware that relies on largely sequential processing, AI chips are built around high levels of parallel processing, allowing them to execute billions of calculations simultaneously. As a result, they provide significantly higher speed and computational power, and are estimated to be up to 10 times more powerful than conventional hardware in artificial neural network (ANN) applications [1].
Higher bandwidth: According to McKinsey & Company, AI chips can offer around 4.5 times more bandwidth than traditional hardware, making them far better suited for AI‑specific tasks [2]. Higher bandwidth enables smoother, more consistent transfer of large data volumes between memory and processing units, which is crucial to fully exploit parallel processing capabilities.

The Role of AI Chips in the Automotive Industry

AI chips play an indispensable role in enabling large‑scale, cost‑effective AI deployment across industries, and automotive is one of the most prominent examples. AI is expected to drive the sector's future growth by enhancing driver experience, improving safety, and accelerating the development of autonomous vehicles.

The automotive AI market is forecast to grow at a CAGR of 24.1% between 2022 and 2027, with global software providers and carmakers already joining the race [3]. For instance, FPT has introduced high-performing solutions such as GenAI‑integrated in‑vehicle infotainment (IVI) systems for personalized driver experiences, AI‑enabled Advanced Driver Assistance Systems (ADAS) for collision avoidance, and Driver Monitoring Systems with AI‑enhanced capabilities including facial recognition, emotion detection, and predictive analysis.

These automotive applications require enormous computational power to perform real‑time analysis of sensor data and enable split‑second decision‑making. Autonomous vehicle functions, in particular, must process vast data streams from cameras, LiDAR, radar, and other sensors, relying on AI chips' parallel processing capabilities to execute multiple tasks in sync, such as object extraction, detection, segmentation, and tracking [4]. Reflecting this trend, global chipmakers such as Intel are releasing automotive versions of their AI chips to match growing demand [5].

The Role of AI Chips in Healthcare and Medical Imaging

AI is also expected to accelerate innovation in healthcare, particularly in medical imaging. Renowned for its precision, AI can improve diagnostic and treatment accuracy by identifying patterns often overlooked by the human eye.

For example, an AI solution from FPT supports dental examination and treatment by detecting issues such as missing teeth, dentures, and tooth decay, as well as identifying implant types and models. This helps dentists save time during diagnostics while improving accuracy. In addition, AI applications support personalized healthcare by enabling tailored treatment plans and medication prescriptions instead of a one‑size‑fits‑all approach.

Another FPT AI solution detects patients' muscle and fat areas to help doctors adjust medication doses. Trained with CT images of patients' abdomens, the AI model analyzes and identifies two types of fat area and four types of muscle area, and can be optimized to run on edge devices or CPUs with a processing time of less than three seconds per slice.

As AI‑driven healthcare solutions advance, AI chips become increasingly important to implement them effectively. Building robust AI models requires training on large datasets of high‑resolution images such as MRI, CT, and X‑rays, demanding enormous computational power that only AI chips can provide efficiently. Moreover, AI chips are critical to enabling AI solutions on edge devices, supporting applications such as real‑time monitoring of health indicators captured by wearables and smartphones.

A Challenging Landscape for the AI Chips Industry

As AI applications continue to proliferate, demand for AI chips is rising in tandem, with global revenue forecast to grow by 33% in 2024 [6]. Despite this positive outlook, the current state of the industry remains uncertain. The AI boom has intensified the race for greater computational power, pushing manufacturers to expand production capacity at an exponential pace to keep up with surging demand. In parallel, the sector is constrained by a global talent shortage, with estimates suggesting that more than 1 million additional skilled workers will be needed by 2030 [7].

However, perhaps the most pressing challenge lies in supply chain disruptions driven by geopolitics. Since the United States imposed sanctions on Chinese technology companies in 2019, political tensions between the US and China have steadily escalated. This culminated in a ban on sales of semiconductor chips to China in 2022, with Japan and the Netherlands subsequently introducing similar export restrictions [8]. As a result, the global semiconductor industry has been negatively affected, with these constraints hindering growth and limiting innovation across the broader technology ecosystem [9].

Vietnam as a Rising Star in the Global Semiconductor Supply Chain

Amid a challenging global landscape, Vietnam is emerging as a key player in the semiconductor supply chain. Although it is still a relative newcomer, the country has demonstrated strong semiconductor potential, with local enterprises already introducing made-in-Vietnam chips. FPT became the first Vietnamese company to design commercial chips. The company has successfully secured orders from Japan, South Korea, Taiwan, and other markets to export 70 million chips.

In addition, Vietnam has attracted major global chip manufacturers such as Intel, Amkor, and Hanmi Semiconductor. The country is home to Intel's largest chip packaging and testing factory worldwide, with an investment of $1 billion [10]. More recently, Amkor Technology has increased its investment in Vietnam to a total of $1.6 million to open its most advanced chip packaging factory [11].

With political advantages, a growing talent pool, and a strong spirit of innovation, Vietnam is proving its potential to help address global challenges in the semiconductor industry.

The Workforce in Vietnam's Semiconductor Industry

Developing human resources for the semiconductor industry has been set as a priority by the government, with an investment plan of US$1 billion to train 50,000 semiconductor engineers by 2030 [12].

The Ministry of Education and Training expects around 7,000 students to enroll in chip designing and related majors at universities in the next year, with plans to increase these figures by 20–30% annually [13]. In parallel, the government has also established a semiconductor and AI center in Da Nang, which is responsible for research and training in microchips, semiconductors and AI development, as well as for fostering technology transfer and international collaboration [14].

Local enterprises are also contributing to workforce development. FPT — a pioneering force in semiconductor development in Vietnam — aims to train 10,000 professionals by 2030, equivalent to 20% of the government's target. The corporation has launched its own training program, with FPT University — part of the FPT ecosystem and Vietnam's first private higher education institution — establishing the Department of Semiconductor and Microelectronics to provide in-depth training in IC design and accelerate R&D for the industry.

More recently, FPT Corporation has also partnered with Taiwan's FCC Partners to establish the Vietnam Semiconductor Development Fund, which is intended to develop human resources and attract investment for the sector.

Government Policies Supporting the Semiconductor Industry

Another major advantage for Vietnam's semiconductor sector lies in the government's encouraging policy framework. The Vietnamese government has repeatedly highlighted the strategic importance of the semiconductor industry and has begun rolling out concrete measures to support its long-term development. Designated as a prioritized product, semiconductors qualify for a wide range of incentives aimed at accelerating both industry growth and manufacturing activities.

These incentives include exemptions or reductions in land rental for semiconductor facilities [15], preferential policies for personal income tax and corporate income tax, as well as dedicated financial support [16]. For instance, semiconductor companies enjoy a preferential corporate income tax rate of 10% for 15 years, compared with the standard rate of 20%. Large-scale and high-impact semiconductor projects are eligible for even lower corporate income tax rates of 9%, 7%, and 5%, with additional possibilities for tax exemptions and reductions [17].

Political Stability

Vietnam combines a stable domestic political environment with increasingly robust foreign relations, creating favorable conditions for the semiconductor industry. As of 2026, the country has established diplomatic ties with nearly 200 countries and signed free-trade agreements (FTAs) with almost 60 economies [18]. Notably, Vietnam has also built comprehensive strategic partnerships with several of the world's largest economies, including the US, China, the EU, the UK, South Korea, Japan, Russia, and more [19].

On this foundation, Vietnam has been actively expanding technological cooperation in semiconductors with major partners. The country has attracted around 40 companies from Japan, South Korea, the Netherlands, and the US to strengthen research, development, and manufacturing activities in the sector [20]. At the same time, collaboration at the state level has been deepened to support Vietnam's integration into the global semiconductor value chain.

A key milestone was the recent upgrade of the Vietnam – United States relationship to a comprehensive strategic partnership, which further strengthens opportunities for cooperation in semiconductors [21]. Under this upgraded framework, the two countries announced semiconductor workforce development initiatives, starting with an initial investment of US$2 million from the US government [22]. To mark the first anniversary of the relationship upgrade, Vietnam and the US also launched the ITSI fund under the US Chips and Science Act, with Vietnam selected as one of eight strategic partners [23]. The fund aims to train 120 instructors and 4,000 students by 2025, and to support universities in developing chip packaging and testing programs in line with US standards [24].

The AI Nation

Vietnam's drive to become an AI nation is one of its strongest motivations for digital transformation. The country aims to rank among the world's top 50 AI powers by 2030 and has introduced a national strategy on AI R&D and applications. This strategy mobilizes coordinated efforts from the government, local communities, and domestic businesses to accelerate AI adoption across sectors.

As the AI movement gains momentum nationwide, both local and international enterprises are establishing dedicated AI centers to deepen research and development capabilities. A notable example is FPT Corporation's US$173 million investment in an AI center in Binh Dinh, designed for the research, training, and development of AI solutions.

At the same time, strategic partnerships are being forged to strengthen Vietnam's national AI capabilities. Local players such as FPT are collaborating with leading global AI organizations including NVIDIA, Landing AI, and Mila to advance AI solutions and best practices. In particular, FPT is partnering with NVIDIA to build a US$200 million AI factory in Vietnam, focused on developing AI and cloud solutions powered by NVIDIA's latest technologies.

The Most Attractive Destination for US Semiconductor Investors

The President and CEO of the US Semiconductor Industry Association has praised Vietnam as the most attractive destination for US semiconductor investors [25], underscoring the country's significant potential. Reflecting this outlook, Statista forecasts that revenue in Vietnam's semiconductor market will increase steadily over the coming years, reaching around $31.39 billion by 2029 [26].

Despite this promising trajectory, Vietnam still faces several underlying challenges, largely because its semiconductor industry is in an early stage of development. Nevertheless, the government and local organizations, such as FPT, have been proactively deepening their engagement in the sector through education, training, and research & development initiatives. These efforts are gradually building a solid foundation for long-term growth.

Looking ahead, further strategic focus on nurturing the next generation of chips — particularly AI chips — will be essential to solidifying Vietnam's position as a key player in the global semiconductor landscape. By continuing to invest in human capital and infrastructure, and by emphasizing the active participation of domestic enterprises, Vietnam's economic and technological outlook remains highly promising.

Frequently Asked Questions

Why are AI chips becoming so important, and how is this reshaping the global semiconductor industry?

Explosive AI adoption is pushing demand for far more powerful chips, making semiconductors strategically critical. At the same time, talent shortages, geopolitical tensions, and supply chain disruptions are forcing companies and investors to seek new, stable hubs—creating an opening for emerging locations like Vietnam.

What exactly are AI chips and why can’t advanced AI run efficiently on traditional processors?

AI chips are specialized processors built to handle massive parallel computations and data movement required by modern AI models. Compared with traditional chips, they deliver much higher speed and bandwidth, enabling real-time AI in intensive use cases like autonomous driving, medical imaging, and on-device inference.

How fast is the AI chip market growing, and what production challenges are chip makers facing?

AI chip revenues are projected to surge, with growth above 30% in the near term as AI adoption spreads. Yet scaling production is difficult: fabs face capacity constraints, acute shortages of skilled engineers, and geopolitical export controls that disrupt supply chains and limit how quickly firms can meet demand.

How is Vietnam emerging as a new semiconductor and AI chip hub in the global supply chain?

Vietnam is quickly positioning itself as a key node in the semiconductor chain. Local players like FPT are designing commercial chips for export, while global firms such as Intel and Amkor have built major packaging and testing facilities in the country, validating Vietnam’s role in future AI chip supply.

What is Vietnam doing to build a strong semiconductor talent pipeline and chip design workforce?

Vietnam plans to invest heavily in human capital, targeting tens of thousands of semiconductor engineers by 2030. The government is funding dedicated training centers, while universities open chip design programs and corporations like FPT launch specialized departments and funds to accelerate IC design skills and R&D capacity.

Which government incentives and policies make semiconductors a strategic industry in Vietnam?

Vietnam designates semiconductors as a prioritized industry and backs that with concrete incentives. Investors benefit from reduced land rents, preferential corporate and personal income taxes, and financial support. Long-duration tax breaks and lower rates for large, high-impact projects underscore a strategic, long-term policy stance.

How do Vietnam’s political stability and trade relationships support semiconductor supply chains?

Vietnam combines domestic political stability with extensive global integration, including nearly 200 diplomatic ties and many FTAs. Strategic partnerships with major economies and initiatives like US–Vietnam semiconductor workforce programs reduce geopolitical risk and help integrate Vietnam more deeply into global chip supply chains.

What is Vietnam’s vision to become an AI nation, and how does that fuel AI chip demand?

Vietnam aims to rank among the world’s leading AI countries by 2030, with a national strategy driving R&D, infrastructure, and adoption. Large investments in AI centers and partnerships with global leaders like NVIDIA both create domestic demand for AI chips and incentivize building local semiconductor capabilities.

Why is Vietnam seen as a top destination for US semiconductor investors, and what is its market outlook?

US industry leaders now describe Vietnam as one of the most attractive destinations for semiconductor investment. Market forecasts project steady revenue growth toward tens of billions of dollars by decade’s end, supported by policy backing, education, R&D programs, and a focus on next-generation AI chip development.