Momentous Year for US-Vietnam Relations
Vietnam and the US are witnessing a momentous year in their bilateral relations, with a strong focus on economic security cooperation. The two countries are working towards materializing their comprehensive strategic partnership, with an emphasis on semiconductor and supply chain ties.
Last autumn, the new comprehensive strategic partnership between Vietnam and the US was established, setting the stage for increased collaboration. To realize the commitments outlined in this partnership, the Vietnamese government has tasked the Ministry of Planning and Investment, Ministry of Science and Technology, Ministry of Foreign Affairs, and Ministry of Industry and Trade with facilitating discussions between officials from both nations.
The US State Department has highlighted economic security cooperation as a key area of advancement in the Vietnam-US relationship. Trade opportunities, clean energy promotion, and semiconductor and supply chain cooperation are among the focal points of this cooperation. These priorities were emphasized during US President Joe Biden’s state visit to Vietnam in September last year.
During a meeting with Vietnamese Prime Minister Pham Minh Chinh in Hanoi on January 25, US Under Secretary of State for Economic Growth, Energy, and the Environment Jose Fernandez reaffirmed the US as a steadfast partner and expressed support for the rapid development of Vietnam’s semiconductor ecosystem. Workforce development initiatives were also discussed.
Prime Minister Chinh urged Fernandez to push the US to recognize Vietnam as a full market-based economy and to remove barriers related to the exportation of high technology to Vietnam. Additionally, he emphasized the importance of enhanced cooperation in various sectors, such as innovation, artificial intelligence, supply chain, green transformation, and specifically the semiconductor supply chain.
Fernandez expressed the US’s positive consideration of the issues proposed by Vietnam, including the market economy status and high-tech export hurdles. He revealed that 15 unnamed US companies operating in semiconductor and green technology sectors have shown interest in Vietnam’s chip and clean energy industries, with an investment of approximately $8 billion.
The partnership between Vietnam and the US in the semiconductor sector was forged in September last year. A memorandum of cooperation on semiconductor supply chains, workforce, and ecosystem development was signed to expand Vietnam’s semiconductor ecosystem and support the US industry.
Under the International Technology Security and Innovation Fund, created by the CHIPS Act of 2022, the US and Vietnam will collaborate on developing Vietnam’s semiconductor ecosystem, regulatory framework, and workforce and infrastructure needs.
The White House recognizes Vietnam’s potential in building resilient semiconductor supply chains. The US aims to support Vietnam’s capacity expansion in reliable partnerships, particularly in areas where reshoring to the US is not feasible under the US CHIPS Act.
Vietnam’s semiconductor market is projected to reach a revenue of $20.15 billion this year, with a compound annual growth rate of 11.62% from 2023 to 2027, resulting in a market volume of $31.28 billion by 2027. Integrated circuits are expected to be the largest segment within the semiconductor industry, with a projected market value of $16.44 billion this year.
The US is the 11th largest foreign investor in Vietnam, with nearly $11.83 billion in registered investment capital across nearly 1,340 projects. Since the establishment of diplomatic relations in 1995, two-way trade between Vietnam and the US has grown significantly, reaching $110.6 billion in 2022.
In the coming months, Vietnam and the US will organize dialogues to further enhance cooperation in science, technology, and digital innovation. Vietnam is actively implementing programs to train high-quality engineers for the semiconductor industry and improve regulations for renewable energy and zoning of rare earth, with the aim of attracting foreign investment.
Overall, the robust partnership between Vietnam and the US in the semiconductor and supply chain sectors is expected to bring significant benefits to both countries. As they work towards achieving their comprehensive strategic partnership, the collaboration in these critical areas of economic security will contribute to the growth and development of both nations.
