Amid surging labor demand in an AI boom, Vietnam aims to train at least 50,000 chip engineers and designers by 2030 as industry giants look to offset severe staff shortages in their home markets. (Illustration by Yoshiko Kawano)Vietnam turns chip sector magnet with affordable, quality talent pool
US, Taiwan, South Korean players beat path to Vietnam though boom strains resources
LIEN HOANG, CHENG TING-FANG, KIM JAEWON and LAULY LI, Nikkei staff writersAUGUST 14, 2024 06:00 JST
HO CHI MINH CITY/TAIPEI/SEOUL -- Visiting her old college in Vietnam, Tran Thi Ngoc Guong didn't expect all the students to be so curious about her industry: Chip design.
"People had so many questions, and they were so detailed," she said. "I was surprised."
One student confided that he had just switched to her major; another asked her about obscure matters like a "clock tree," a hardware design circuitry concept -- something she had never encountered when she was a student.
A lot has changed in the five years between Guong's graduation and her current position as senior engineer for physical design at U.S. chip developer Marvell. Now, fresh-faced Vietnamese students are jumping into semiconductors, and the government has a target of training at least 50,000 chip engineers and designers by 2030.
"I didn't think one day, I would end up in such a hot sector," Guong, 26, said at her desk in Ho Chi Minh City in southern Vietnam, adorned with photos of her dog, a Vietnamese book about TED Talks and medals from company fun-runs.
Ho Chi Minh City, above, has become home for a growing number of overseas semiconductor design businesses. © Getty ImagesThe heat comes from a combination of factors. One is the surging demand for chip engineers amid a boom in artificial intelligence. Supply chain shifts sparked by U.S.-China tensions are also driving up demand for local talent. Meanwhile, severe shortages of labor in traditional chip economies like South Korea and Taiwan, as well as the U.S., mean companies are looking further afield for engineers.
Alchip Technologies, Taiwan's leading provider of AI chip design services, is expanding its R&D team into Vietnam, where it is planning to open its first office this year. The company is likely to increase its headcount to up to 100 engineering staff in two to three years, CFO Daniel Wang said.
"After evaluating several Asian destinations for R&D team expansion, we realized that attracting talent in established tech economies like Japan might be challenging for [a company of] Alchip's size and scale, though we are also expanding there," President & CEO Johnny Shen said.
"Vietnam's promising pool of engineering talent and their strong work ethic make it a highly attractive option for us. We've been impressed by the dedication and commitment of Vietnamese engineers, who are eager to learn and contribute."
Also venturing into Vietnam in search of young engineers are GUC and Faraday Technology, affiliate chip design service providers for TSMC and UMC.
Likewise, South Korean companies are turning to Vietnam, partly to offset a brain drain in their home market.
"Now, it's so easy for smart people in our country to go to the U.S. after studying hard. Many of them join Nvidia with six-digit or even million-dollar paychecks," MetisX CEO Jin Kim said in a recent meeting between business leaders and Oh Youngju, Minister for Small and Medium-sized Enterprises (SMEs) and Startups. "We need to offer a competitive package, but a single company can't afford it by itself."
In addition to subsidies for R&D, executives at the meeting called for an education system aimed at training foreign staff and a loosening of visa rules to attract them. The country that came up most often in the discussion: Vietnam.
Making the grade
South Korea's BOS Semiconductors entered Ho Chi Minh City in 2022 to set up a support team. But as executives jetted between Vietnam and Korea, comparing the two sets of staff, the quality of Vietnamese engineering convinced them to upgrade the team.
South Korea's BOS Semiconductors upgraded plans for its presence in Vietnam after being impressed by the quality of local engineering talent. (Photo by Shinya Sawai)"They realized this could be a main R&D center," country manager Lim Hyung Jun said in an interview. "That was really unexpected."
BOS designs AI chips, including for autonomous driving, for automotive clients like Hyundai. Lim said reaching one goal, that of having a system on a chip (SoC) designed in Vietnam, would demonstrate local ingenuity.
"It can shape the market trend," he said.
There are about 50 staff members at the Ho Chi Minh City office, including design manager Nguyen Hung Quan. He said his colleagues are "very excited" to work on matters like high-speed data transfer, which is helping them learn more skills.
BOS Semiconductors' Design Manager Nguyen Hung Quan, center, works in the company's R&D center in Ho Chi Minh City. (Photo by Shinya Sawai)"In Vietnam we're at the R&D stage," Quan said. "Production is really hard and expensive, but this will put us in that direction."
BOS compatriot ADTechnology runs two research centers in Ho Chi Minh City.
The availability of tech workers in a time of shortage could help Vietnam achieve one of its long-held dreams: moving up the tech value chain.
Marvell, for example, describes Vietnam as a "strategic location for the development of engineering talent."
Industry veteran Le Quang Dam helped build the U.S. company's first office in the country. From only a few dozen engineers in the first few years, his team now numbers more than 400, up from 300 last year.
"Vietnam will become Marvell's third-largest chip design hub, just after its headquarters in the U.S. and India," Dam, general manager of Marvell Vietnam, told Nikkei Asia.
Marvell aims to increase its local headcount to about 500 by 2026. The hiring plan includes not only staff for the offices in Ho Chi Minh City but also a new location in Da Nang in central Vietnam.
"I was very excited when the CEO of Marvell asked me to open the first office in Vietnam. ... Now, 11 years later, I feel so proud of Marvell and the team and what we have achieved," Dam said, adding that the Vietnam team is "capable of doing R&D on the most leading-edge chip technology."
Unlike low-tech or labor-intensive fields, Marvell's Vietnam operation requires advanced engineering capabilities. It primarily focuses on high-speed data center optical connectivity, storage, and analog and mixed-signal semiconductor technology -- all essential for scaling up AI infrastructure.
The majority of Dam's team members are very young -- in their 20s or 30s -- and more than 20% are female, he said. "I am still working to increase that percentage to hire more female engineering talent."
Le Quang Dam, general manager of Marvell Vietnam, said the country will become Marvell's third-largest chip design hub after its HQ in the U.S. and its India operation. (Photo by Lien Hoang)U.S.-based Synopsys, the world's top chip design tool maker, is among the most active to venture into Vietnam, where it currently has more than 500 employees across multiple design centers in several cities.
"The high degree of interest among Vietnam's students and workforce to be trained in semiconductor engineering, coupled with the government's funding and programs, are helping establish the country as a semiconductor talent hub," Robert Li, Synopsys vice president of sales, Taiwan and Southeast Asia, told Nikkei Asia.
According to Li, Synopsys' Vietnam team is addressing its customers' most critical challenges.
A prime example is the team's pivotal role in developing the industry's first UCIe-connected, chiplet-based test chip, unveiled in 2023 in collaboration with Intel. UCIe, an industry standard for advanced chip packaging connections backed by leading chipmakers like Intel, TSMC and Samsung, is reshaping the chip industry landscape. Chiplets, or multi-die chips, meanwhile, are redefining chip design and manufacturing, and Synopsys' Vietnam team is at the forefront of this transformation.
Young Vietnamese people pictured in Hanoi. The Vietnamese government's aggressive push to make its tech economy more sophisticated has helped enlarge and improve the engineer candidate pool. (Photo by Shinya Sawai)Brian Chen, a partner at KPMG Taiwan and KPMG Vietnam, said the demand for higher level engineering skills in Vietnam is much larger than the supply, driven by the China-U.S. tech war that has resulted in many companies shifting operations to Southeast Asia.
"We've noticed that during COVID, many local engineering talents have moved back to Vietnam from other Southeast Asian countries, such as Singapore. But there is still a lot of room for the talent pool to grow, as a lot of tech companies are expanding in the country," Chen, who has been living in Vietnam for years, told Nikkei Asia.
In chip design, Chen said, "each company is hiring at least 300, or 500 people for their Vietnam office."
Compared with Taiwan or South Korea, the productivity and salary levels for engineers in Vietnam make the country attractive for companies, Chen said, while the government's aggressive push to make its tech economy more sophisticated has helped enlarge and improve the candidate pool.
According to the career resources website Salary Explorer, Vietnamese engineers earn an average of $665 a month, lower than $5,627 for peers in Singapore, $3,782 in Taiwan, $2,826 in South Korea and $1,313 in Malaysia.
Dam agreed that a key driver is the trend of global supply chain diversification due to COVID disruptions and U.S.-China tensions, which, he said, led to "many investments shifting from China, Korea and Taiwan to Vietnam." Vietnam is also politically stable as well as cost-effective, he said.
Too much of a good thing?
But as tech investment floods in, signs of strain are emerging.
Traffic in Ho Chi Minh City has become more congested, Marvell's Dam said. The company maintains two offices in the city to help cut down on commuting times by letting staff choose to work from the more convenient location, he explained.
Traffic in Ho Chi Minh City has become busier as the signs of strain on the city's infrastructure emerge alongside its tech sector development. © Getty Images"It was a challenge to find suitable space because we not only need standard offices, we also need space for our [R&D] labs that require different power supplies and air conditions for our equipment," Dam said, adding that infrastructure needs to be improved.
"For IC (integrated circuit) design, we are lucky as we don't need that much energy and water. But for overall industry [development], power, energy and water supply is an issue. For chip packaging, assembly and testing, they require a lot of electricity and water."
And the benefits that are currently attracting foreign investment may not last.
Chen, the KPMG partner, estimates that salary levels in Vietnam could soon catch up with offerings in Taiwan due to the robust demand for workers. "The salary level is increasing sharply. Higher-level talent will enjoy at least 10% growth in wages each year."
Ho Chi Minh City is foreign companies' top choice to attract employees due to the city's quality of life and vibrant commercial activities, Chen said. "The growth of the higher-level talent pool in Vietnam is just at its budding stage. We foresee the companies will go to Hanoi as the next stage, when the talent market here is saturated."
While Ho Chi Minh City has been foreign companies' top location choice so far, industry watchers expect businesses to turn their attention to Hanoi, above, once the Ho Chi Minh City talent market is saturated. (Photo by Shinya Sawai)But for now, demand for talent is still far outstripping supply -- and not only in Vietnam.
Malaysia, a chip industry hub in the 1970s and 1980s, is pushing to rebuild its domestic industry. Investment is flowing in from some of the biggest names in the business, but observers point to a shortage of local engineers as one of the challenges standing in the way of the government's dream. Thailand is enjoying a flurry of new printed circuit board, notebook and server investments but also faces a growing need for local tech talent.
Japan is also attempting to regain its glory days as a chip powerhouse, and the dearth of experienced engineers is a near-constant refrain among policymakers and industry figures.
Even China, where the government is throwing its weight behind the domestic chip industry, is having challenges recruiting enough engineers as more graduates from top universities opt for better-paying jobs in software or financial services.
Next-generation development
In Vietnam, chip executives like Marvell's Dam and state officials say scholarships and internships are some of the key tools they are using to bring more engineers into the fold.
Seoul AI Hub, a research unit of the Seoul Metropolitan Government, plans to offer a three-month internship program to Vietnamese students starting in September, connecting them to South Korean chip design companies. The South Korean Ministry of SMEs and Startups is working with the Justice Ministry to develop looser visa rules for Vietnamese.
Given the market dynamics, the supply of talent in places like Ho Chi Minh City, above, can't keep up with demand, chip sector managers say. © Getty ImagesWashington, meanwhile, is working with seven countries, including Vietnam, to build a chip supply chain that excludes China. A U.S. official told Nikkei earlier this year that Vietnam's long experience with assembly would help it expand into chip design.
"There are many countries around the world who would love to have [Vietnam's] ability to do assembly, testing and packaging [ATP]," said Jose Fernandez, U.S. undersecretary of state for economic growth, energy and the environment. He added, "You have to start with ATP, and you can build from there."
Other efforts are coming from the private sector.
Pegatron, a Taiwanese supplier to Apple and Microsoft, is keen to expand the local engineering talent pool in Vietnam, where it has been building up its manufacturing presence since 2020.
"Talent productivity and quality are increasing in Vietnam, but given the market dynamics, the supply of talent can't keep up with demand, so companies have to engage more in training," Pegatron Vietnam General Manager Chi-Liang Chen told Nikkei Asia.
Chen said the Vietnamese government's growing focus on the semiconductor sector also affects recruitment for other tech sectors, and Pegatron expects the shortage to be "even more apparent" before long. "We really hope the government and schools can be more aggressive in opening more engineering-related departments with incentives to enlarge the talent pool," Chen said.
Vietnamese engineers work on designing AI chips for cars at BOS Semiconductions in Ho Chi Minh City. (Photo by Shinya Sawai)Pegatron has been offering scholarships to students at the Vietnam Maritime University and Haiphong University and sponsors school events, sports games and internship programs. It also works with multiple universities to co-design curricula and equipment to precisely train the workforce the tech industry needs, according to the company.
From her desk in Ho Chi Minh City, senior engineer Guong's career path suggests efforts like these are paying off.
After considering psychology, she chose to study electronics because there was financial aid for the program. Then friends told her about a good internship with a focus on semiconductors. She went for it and before long had found a full-time position with Marvell.
Now, Guong hopes she can get other young Vietnamese to follow in her footsteps.
"If I can help train other people, build them up, then I will be happy," she said. "It's not just about making money."
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