Vietnam: A Strategic Destination for Major Technology Firms

Emergence in the Global Supply Chain

Vietnam is fast becoming a focal point for major technology firms, thanks to its advantageous geographic position within the global supply chain. With a rich tapestry of history and culture, this Southeast Asian nation is evolving into a hub for technological advancement and industrial growth.

The surge in investment related to hi-tech projects and research and development (R&D) centers is a crucial factor propelling this transformation. Supportive government policies further enhance the allure, propelling growth in Vietnam’s industrial real estate market as demand escalates for infrastructure and industrial facilities.

Rising Demand for Industrial Real Estate

Recent reports reveal a notable uptick in the demand for industrial real estate. In fact, consumption soared in the third quarter of 2024 compared to the previous quarter.

Key factors driving this trend include flourishing areas with robust transportation infrastructure and secure legal titles. Provinces experiencing meaningful foreign direct investment (FDI), such as Thai Nguyen, Bac Ninh, and Bac Giang, are particularly attractive. The focus remains on high-tech sectors like electronics, semiconductors, artificial intelligence (AI), and renewable energy.

As these sectors expand, the need for advanced facilities rises correspondingly. A number of industrial projects have been recently approved, including the 21.99-hectare Lien Ha Industrial Cluster and the 15-hectare Duc Tu Industrial Cluster. Not to be overlooked is the stunning Dong Van V Phase 1 Industrial Park in Ha Nam province, sprawling over an impressive 237.3 hectares.

By the close of 2024, the Foreign Investment Agency projects that total registered foreign investment will hit approximately $38.2 billion. This includes numerous high-value projects centered around semiconductors, energy, and electronic components.

Thomas Rooney, Associate Director of Industrial Real Estate Services at Savills Hanoi, emphasizes that “Vietnam’s strategic geographic location positions it as an attractive destination for major technology firms,” with the ongoing wave of investment significantly impacting the industrial real estate landscape.

Infrastructure Growth and Foreign Investment

The infrastructure in Vietnam is robust and continues improving, with 7% of GDP earmarked for essential projects. Noteworthy initiatives include the North-South Expressway and the forthcoming Long Thanh International Airport, alongside deep-water ports like Cai Mep in the southern province of Ba Ria-Vung Tau. These advancements create vital connections to Europe, the Americas, and Southeast Asia.

In addition, an abundant labor force, policies favoring hi-tech industries, and continuously enhancing infrastructure are vital in attracting international investors. Recently, a landmark cooperation agreement between the Vietnamese government and NVIDIA, a leader in AI and semiconductors, signals an exciting development. This partnership positions Vietnam to emerge as a leading center for AI R&D in Asia.

The establishment of the R&D center, along with the government’s strategies focusing on human resource development, promises to add significant value, draw investment, and bolster the high-tech sectors.

The Semiconductor Industry: A Driving Force

The semiconductor industry is anticipated to generate revenues of $18.2 billion in 2024, with the Vietnamese government placing considerable emphasis on this field as a catalyst for growth in industrial real estate. Rooney predicts that semiconductors will be a hot topic from 2025 to 2026 as Vietnam capitalizes on its inherent strengths.

One standout advantage Vietnam possesses is its abundant rare earth resources, second only to China in global rankings. These materials are crucial for electronics and semiconductor production, paving the way for sustainable growth in the industry. The government is also enacting favorable policies to nurture semiconductor development.

To meet the industry’s manpower needs, there are plans for training at least 50,000 graduates by 2030 as part of the Prime Minister’s initiative focused on developing human resources for the semiconductor sector.

Moreover, a dedicated fund has been established to support investments in high-tech projects, aiming to stabilize the investment environment and enhance competitiveness. The National Power Plan VIII ensures reliable power supply while fostering sustainable energy objectives, crucial for semiconductor companies.

Infrastructure Enhancements for Sustainable Growth

Savills notes that Vietnam’s industrial real estate sector remains particularly attractive to semiconductor investors. Ready-built factories and warehouses offered by leading developers meet the demanding specifications of this sector with modern infrastructure and advanced safety measures.

Strategically positioned near international airports, these developments facilitate efficient transportation and trade. For instance, the Thuan Thanh Industrial Park in Bac Ninh is emerging as a sustainable industrial zone aimed at attracting high-tech industries like semiconductors.

In a bid to accommodate investment from both local and foreign companies, new industrial parks are being constructed with eco-friendly models. Existing facilities are also undergoing infrastructure upgrades. Over the next three years, various upgrades are planned for several industrial parks, beginning with the Long An project, the first of its kind in the southern region.

By staying attuned to global trends and leveraging its strategic advantages, Vietnam is carving out a prominent niche for itself in the industrial and technological landscape.