Vietnam expands chip packaging footprint as investors reduce China links

Hana Micron

12/11/2024 06:04

* 
      Amkor, Hana Micron, Intel among big foreign players in
Vietnam
    

        * 
      Local tech firm FPT invests in testing factory, sources
say
    

        * 
      Vietnam to have up to 9% of global chip testing capacity
by
2032, says report
    

        * 
      Equipment, operations transferred from China, executives
say
    

  
    By Francesco Guarascio
       HANOI, Nov 12 (Reuters) - Foreign companies are
expanding capacity in Vietnam for testing and packaging chips
while domestic firms are eyeing investments, as a shifting of
industrial activity away from China gathers pace due to trade
tensions with the West, executives said.
    The semiconductor back-end manufacturing sector, which is
less capital-intensive than more strategic front-end chipmaking
in foundries, is currently dominated by China and Taiwan, but
Vietnam is among the fastest-growing countries in the $95
billion segment.
        Hana Micron's  067310.KQ  vice president for Vietnam,
Cho Hyung Rae, told Reuters the company was expanding in the
Southeast Asian country to meet requests from industrial clients
who wanted to have some production capacity moved away from
China.
    The South Korean company is investing about 1.3 trillion won
($930.49 million) until 2026 to boost packaging operations for
legacy memory chips, a company official based in South Korea
said.
    U.S.-headquartered Amkor Technology  AMKR.O  announced last
year a $1.6 billion plan to build a 200,000 square metre (2.2
million sq. ft) factory which it said would become its most
extensive and advanced facility, "delivering next-generation
semiconductor packaging capabilities."
    A business executive with direct knowledge of Amkor's
operation in Vietnam said some of the equipment installed in the
new plant had been transferred from factories in China.
    Amkor did not reply to requests for comment about the
transfer of machinery.
    Intel  INTC.O , which had a large booth last week at
Vietnam's first international semiconductors exhibition near
Hanoi, has in the country its largest chips back-end factory in
its global network.  

    DOMESTIC PLAYERS    
    Vietnam's growth in the back-end segment of the chips
industry has been encouraged by the Biden administration amid
growing trade tensions between Washington and Beijing, which may
further escalate with the second presidency of Donald Trump.
    Thanks largely to the investments from foreign companies,
Vietnam is expected to have by 2032 an 8% to 9% share of global
capacity in chip assembling, testing and packaging (ATP), from
just 1% in 2022, according to a report published in May by the
U.S. Semiconductor Industry Association and Boston Consulting
Group. 
    Local companies are also expected to contribute to the
sector's forecast growth.
    Vietnam tech firm FPT  FPT.HM  is building a testing factory
close to Hanoi, according to three corporate sources, who
declined to be named because the information was not public. 
    One source from the company said the 1,000-square-metres
plant is expected to start operations early next year with 10
testing machines, to be tripled by 2026, for an investment of up
to $30 million. It is still, however, seeking strategic
partners.
    FPT did not reply to a request for comment.
    Vietnamese investment firm Sovico Group is also looking for
a foreign partner to co-invest in an ATP facility in Danang, a
coastal city in central Vietnam, said Le Dang Dung, a senior
adviser to Sovico.
    Vietnam is also aiming to become a player in front-end
chipmaking.
    Viettel, a state-owned defence and telecoms company, plans
to build Vietnam's first foundry, two company sources said, to
meet the government's ambitious goal of having at least one fab
online by 2030.
    The company did not reply to a request for comment.

 (Reporting by Francesco Guarascio; Additional reporting by
Hyunjoo Jin in Seoul, Phuong Nguyen and Khanh Vu in Hanoi;
Editing by Muralikumar Anantharaman)
 ((Francesco.Guarascio@thomsonreuters.com;))