Vietnam's chip packaging and testing business is growing, and supply-side fragmentation is splitting the market

According to reports, South Korea's Hana Micron recently disclosed that it will invest 1.3 trillion won (about 6.695 billion yuan) in Vietnam by 2026 to expand its traditional memory chip packaging business. Last year, Amkor Technology of the United States announced plans to invest $1.6 billion in Vietnam to build a 200,000 square meter factory to achieve "next-generation chip packaging capabilities." A corporate executive familiar with Amkor Technology's business in Vietnam disclosed that some of the equipment installed in the new factory has been shipped from China to Vietnam. In addition, Intel Corporation of the United States has also built a factory in Vietnam, and the factory is Intel's largest chip back-end factory in the world.

The report cited a report released in May by the Semiconductor Industry Association of the United States and the Boston Consulting Group, saying that Vietnam has benefited greatly from investment by foreign companies, and its share of global chip assembly, testing and packaging capacity is expected to rise from 1% in 2022 to 8% to 9% by 2032.

At present, companies in mainland China and Taiwan together account for more than 60% of the global chip packaging and testing market share. In the United States, only Amkor Technology accounts for about 14% of the global market share. This industrial structure has aroused the vigilance of the United States. Relocating packaging companies to Vietnam is its latest attempt to "decouple" from China. The report analyzed that the Biden administration encouraged Vietnam's growth in the back-end field of the chip industry, and with the Trump administration taking office, this tension may escalate further. However, the tough approach of squeezing China out of the industrial chain has caused dissatisfaction in the industry.

According to Reuters, the CEOs of Germany's Infineon, STMicroelectronics and the Netherlands' NXP, the three largest computer chip manufacturers in Europe, made a rare collective statement during the Munich Electronics Conference in Germany on the 11th, saying that their businesses have been affected by uncertainty and the nationalist industrial policies that have emerged in recent years. The US and European governments require that each region have its own semiconductor production line. This trend towards regional self-sufficiency is leading to market fragmentation and posing an increasingly severe development obstacle to companies.

Infineon CEO Hanebeck said the trend of chip industry fragmentation will accelerate, and the supply side has already begun to fragment, and the situation will be worse after the tariffs are imposed. STMicroelectronics CEO Chery said the chip industry is forced to "produce in China for China and in the West for the West", which has led to huge consumption of materials and engineering.

NXP CEO Sievers said that no country can dominate the chip industry or develop the chip industry independently from other countries in the world. Practices such as "decoupling and breaking the chain" will bring too high costs and consumers will not pay for it. He believes that over time, every government will eventually realize that such practices are impractical.