Vietnam’s Ambitious Goals in the Global Value Chain of High-Tech Industries

John Low, Managing Partner of Roland Berger Southeast Asia

Vietnam’s Vision for High-Tech Integration

Vietnam is on a clear pathway to become a regional hub for high-tech industries, aspiring to move beyond simple assembly and towards high-value activities such as semiconductor production, electric vehicles (EVs), and smart electronics. The strategy is not just about manufacturing but includes full participation in the value chain, encompassing everything from chip design and testing to digital R&D.

Currently, Vietnam is solidifying its role in back-end semiconductor operations and EV component manufacturing. With rising infrastructure readiness and significant investor interest, the country has the potential to deepen its involvement. However, achieving advanced capabilities in fabrication and R&D presents challenges that must be addressed, such as power reliability, logistical capacity, and a shortage of skilled workers.

Conditions for Advancing to High-Value Segments

To ascend the value ladder, Vietnam will need to focus on several key areas:

1. Skilled Workforce Development: A highly skilled technical workforce is vital. Revamping university curricula and fostering industry-led training programs will better prepare graduates for challenges in semiconductor design and software engineering. Strong partnerships between academia and industry are essential.

2. Robust Innovation Ecosystem: Establishing a conducive innovation environment is crucial. This includes creating R&D zones, tax incentives for research activities, and providing venture funding for tech startups. Enhanced protection of intellectual property and a supportive regulatory framework will foster an atmosphere encouraging experimentation.

3. Supplier Development: Supporting local small- and medium-sized enterprises to meet international standards is critical. By enhancing their capabilities, Vietnam can anchor high-tech investment more firmly in the local economy.

4. Stable Infrastructure and Policy Consistency: Reliable infrastructure along with a consistent policy environment regarding energy supply and data governance will be necessary to attract and maintain advanced manufacturing and design operations.

Turning Investment into Genuine Industrial Upgrading

As major technology companies look to Vietnam for investment, the country must ensure that this influx translates into meaningful industrial advancements rather than merely expanding assembly operations. Investors seek stable policies, reliable infrastructure, and a skilled labor pool, alongside efficient logistics and robust local supplier networks.

To achieve industrial upgrading, Vietnam can tie investment incentives to technology transfers, local sourcing, and collaborative R&D initiatives. This strategy could involve encouraging joint ventures and supplier development programs, similar to success stories from countries like Malaysia and Thailand, eventually transforming Vietnam into a regional innovation hub.

Current Standing of Vietnamese Enterprises in the Global Supply Chain

Currently, Vietnamese enterprises are positioned in the lower and middle tiers of the global value chain, primarily focusing on assembly and basic manufacturing for foreign companies in electronics, textiles, and machinery. While this has fostered job creation and exported growth, domestic value capture remains limited, with a majority of high-tech components still imported.

For deeper involvement in global supply chains, local firms need to enhance their technology levels, improve quality control, and achieve international certifications. Strengthening links with multinational corporations through collaborative supplier development and joint ventures can facilitate technical knowledge transfer and boost competitiveness.

Bridging the Talent Gap in High-Tech Sectors

Addressing the talent gap is critical for success in high-tech industries. Vietnam must prioritize human capital development as a cornerstone of its high-tech strategy. This includes modernizing technical and vocational education to align with industry needs while forming partnerships between universities and global tech giants for practical training.

Additionally, attracting overseas Vietnamese professionals and international experts with competitive incentives will further bolster the talent pool. Encouraging multinational-led training academies and internship programs can enhance the knowledge base and practical skill sets of local workers.

Advantages and Challenges of the China+1 Strategy

The China+1 strategy presents Vietnam with a significant opportunity to position itself as a prime destination for high-tech manufacturing. Benefits include its strategic geographic location, robust trade agreements, competitive costs, and political stability, all of which make it attractive for global manufacturers diversifying their supply chains. Major corporations like Samsung and Intel are already expanding their operations in Vietnam.

Despite these advantages, Vietnam faces challenges, such as infrastructure limitations, energy constraints, and a shortage of skilled engineers. Addressing issues like policy consistency and enhancing local supply chains will be paramount for sustaining investor confidence and turning Vietnam into a leading high-tech manufacturing hub.

Balancing Foreign Investment with Domestic Capability Building

To successfully attract foreign investments while fostering domestic capabilities, Vietnam must encourage deeper collaboration between multinational corporations and local enterprises. This could take various forms, such as establishing joint R&D centers and supplier development programs, creating innovation clusters that mirror successful models in other Asian countries.

For example, Malaysia’s Penang electronics cluster has thrived through collaboration between global firms and local businesses, supported by government-led training initiatives. By drawing lessons from success stories like Taiwan’s semiconductor ecosystem and Thailand’s automotive sector, Vietnam can effectively link investment incentives to local participation, reinforcing its capacity for technology transfer and innovation.

In striving to meet its ambitious goals, Vietnam combines strategic vision with practical steps, laying the groundwork for a more advanced and integrated position in the global high-tech value chain.