The Vietnamese government is to invest $500m to build a semiconductor research, design, production, packaging, and testing facility.

The country’s first government-funded chip fab forms part of a wider semiconductor strategy that supports Vietnam’s long-term vision to shore up its domestic semiconductor industry by 2050.

According to news outlet Vietnam Net, the new fab will focus on the production of small-scale, high-tech chips that will support domestic industries and national security, reducing Vietnam’s reliance on global supply chains.

In order to support its ambition of transitioning Vietnam away from being a low-cost manufacturing hub by investing in chip research, design, and production, the government is offering a number of financial incentives to attract private investment in the sector.

This includes offering 30 percent in direct funding for the chip fab, if it's completed by December 31, 2030, and allowing chip companies to retain up to 20 percent of taxable income for reinvestment. Furthermore, the allocation of land for semiconductor factories will not be put out for public auction in the hope that this will speed up the construction of facilities.

“Semiconductor technology is the future,” said Nguyen Trung Kien, vice director of Viettel’s semiconductor technology division, in comments reported by Vietnam Net. “Viettel has been laying the foundation for chip research and production, and this initiative will allow Vietnam to compete globally in semiconductor design and manufacturing.”