Vietnam becoming a chip-making powerhouse

Vietnam is becoming an important new player in the global semiconductor industry, a decoupling beneficiary of the US-led chip wars against China.

Vietnam’s well-educated and highly motivated engineers work for comparatively low wages, attracting various semiconductor packaging and design companies from the US, Germany, Japan, South Korea and Taiwan.

With a technology-oriented industrial development policy, Vietnam is following in the footsteps of Malaysia, currently the world’s sixth-largest semiconductor exporter and with 13% of the global assembly, testing and packaging industry, according to ISIS Malaysia, a think tank.

This will no doubt please the Biden administration, which has been promoting Vietnam as an alternative to China under the US-Vietnam Comprehensive Strategic Partnership, though the trend would probably be happening anyway.

Market research organizations calculate that Vietnamese engineers are paid about US$8,000 per year, about half the amount engineers command in Malaysia. Those figures are $34,000 in South Korea, $46,000 in Taiwan, $50,000 in Japan and $68,000 in Singapore.

Semiconductor industry sources say annual salaries for design engineers with less than three years of experience range from $10,000-$15,000 in Vietnam versus $65,000-$70,000 in the US.

Even allowing for faulty data and exchange rate volatility, salaries in Vietnam and Malaysia are so far below those of the “good-paying union jobs” touted by the Biden administration that there is little chance of closing the gap in the foreseeable future.

This explains why Intel’s largest integrated circuit (IC) assembly, packaging and test facility is located in Vietnam and its largest advanced 3D packaging facility is in Malaysia.

Germany’s