Given the depth of the current downturn, it's now unclear if foreign chip makers would roll the dice and invest in Vietnam. The current economic climate may have put a damper on planned or proposed investments in Vietnam in the short term. Long term? Don't look for Vietnam to emerge as an IC-packaging powerhouse in the foreseeable future.
Besides Vietnam, other emerging nations are struggling to get their respective IC manufacturing industries off the ground. During the various boom cycles, Brazil, India, Malaysia, Russia, Thailand and other emerging nations all want to play in the high stakes semiconductor manufacturing game as a means to create new jobs in the arena.
This is easier said than done. The barriers to entry and costs are high. Fabs costs are soaring out of control. Even new IC-packaging plants are costly. Some say it's too late for new nations to enter the fab fray. The real future could be in IC design, but some nations have more expertise in the field than others.
There are countless examples of failures and setbacks in IC manufacturing. For example, Brazil is trying to build a small-scale R&D fab, which is reportedly behind schedule. And simply put, India has been a bust in building semiconductor fabs. At one time, several Indian startups emerged and claimed that they would build large-scale fabs. Today, India is still on the starting block in the arena, with little or no hope of ever building full-fledged, modern fabs. India simply failed to understand the complexities and costs of building new fabs.
Unlike Brazil, India and other nations, Vietnam has one advantage: Intel has already invested in that nation and remains committed to the project. Bad news: IC design activity is tiny in Vietnam, compared to China, India and other nations. Japanese chip maker Renesas Technology Corp. and others have IC design subsidiaries in Vietnam.
There is more good--and bad--news for Vietnam. In 2007, Vietnam entered the World Trade Organization (WTO). Vietnam's low-cost of labor is attracting global contract manufacturers to set-up operations in the nation. In 2007, Taiwan contract manufacturing giant Foxconn opened factories in northern Vietnam, the first phase of a massive investment that executives said would total billions of dollars over the next few years.
Vietnam has a sizable consumer market. IC consumption in Vietnam is expected to reach $1.8 billion by 2011, according to Frost & Sullivan. ''Countries such as Indonesia and Vietnam are experiencing high spending on consumer electronics and household appliances. This is greatly increasing demand for 16-bit microcontrollers in Southeast Asia, with these two countries leading the pack in terms of volume growth, followed by Malaysia and Thailand,'' according to the firm.
''The race to roll-out 3G services in the hugely competitive growing markets however shows no signs of abating. Cambodia, Indonesia, Thailand and Vietnam -- each have no less than six mobile operators; Indonesia the most with eleven,'' according to the firm. ''Growing markets like Cambodia, Vietnam, Indonesia and the Philippines, with mobile penetration well below 75 percent and even lower fixed broadband penetration, are likely to see growth in new subscriber additions."
However, thanks to the downturn, times are tougher for the nation. So far this year, Vietnam has attracted some $10 billion in foreign direct investment, down 81.2 percent from a year ago, according to the Vietnam Business Forum, citing the Ministry of Planning and Investment (MPI) as its source. On the other hand, Vietnam's economy is projected to grow from 5-to-5.2 percent in 2009, according to reports.