Taiwanese investment fuels high-tech Vietnamese industry

Deep links

Taiwan is well known as a global leader in electronics and semiconductors, with more than 70% of the market share for high-end chips. Companies from the Taiwanese market make more than 80% of the world’s PCs and 90% of its servers.

In contrast, Vietnam owns a semiconductor industry which is anticipated to be valued between US$20 - 30 billion by 2030, with the ambition to become the key player in the global semiconductor industry.

The country has started to realise this aspiration by issuing policies focusing on high-quality FDI attraction and training enhancement. It boasts many advantages such as an abundance of young and skillful workers, an advantageous geographic location, a growing consumption market, competitive operational cost, and above all, a wide range of FTAs with diverse countries and territories.

Within ASEAN, Vietnam has become the second-biggest recipient of overseas investment from Taiwan, after Singapore. The Binh Duong branch of the Council of Taiwanese Chambers of Commerce in Vietnam has more than 600 members, the most of any chamber of commerce for companies from Taiwan anywhere in the world.

Vietnamese appeal

According to economists, with a population of 100 million Vietnam has caught the eyes of Taiwanese investors thanks to its strong fundamentals and cultural similarity, especially in high-tech area. It houses Taiwanese giants in electronics such as Foxconn, Pegatron, Qisda, Compal, Quanta, and Wistron. In addition, the country recently received US$250 million investment from Tripod Technology into Ba Ria-Vung Tau province.

With the pivotal shift occurring from labour-intensive industries to skill/knowledge-intensive sectors, the Vietnamese Government is offering preferential policies in high-tech industries, aiming to attract more quality investments, thereby promisingly bringing more benefits to foreign investors, including those from Taiwan.

The most complex manufacturing operations, such as those producing the most advanced semiconductors, are likely to remain in Taiwan for the foreseeable future, given the degree of specialisation, intellectual property, and capital expenditure required.

Think-tanks expect that a growing cross-section of advanced manufacturing will migrate to ASEAN and Vietnam over the coming decades as demand increases and regional supply chains become even more advanced.

Vietnam itself has witnessed strong and broadening economic recovery, with GDP growth of 6.9% in the second quarter of the year, accelerating growth in the first half of the year to 6.42%, the second highest figure recorded within five years.

This out-of-expectation result shows that Vietnam can reach year-end growth of 6.5%, likely becoming ASEAN’s fastest-growing economy in the process. Those factors have increased the country’s appeal in international investors’ eyes, including Taiwanese companies.

At present, Taiwan is the fourth largest investor into the Vietnamese market, boasting nearly 3,200 projects and a total registered capital exceeding US$39.5 billion.