Semiconductor and Renewable Energy: Taiwan-Vietnam Cooperation under New Leadership – Taiwan Insight
Taiwan Insight
The online magazine of the Taiwan Research Hub
Written by Tran Thi Mong Tuyen.
Image credit: 駐越南代表處石瑞琦大使致詞 by 中華民國駐外單位 Taipei Economic and Cultural Office in Vietnam/ https://www.taiwanembassy.org/vn/post/567.html.
Since the 1990s, Taiwan’s government has championed the “Go South” and “New Southbound” policies, catalyzing Taiwanese entrepreneurship across the Association of Southeast Asian Nations (ASEAN). Vietnam, boasting a stable economy, ample labour force, a youthful demographic, and rich natural resources, has emerged as a prime destination. Over two decades ago, Vietnam began attracting numerous Taiwanese entrepreneurs, particularly in traditional sectors such as textiles, footwear, furniture, and investment. Prior to the US-China trade war, Taiwanese investment in Vietnam was predominantly geared towards traditional manufacturing, comprising nearly 85% of Taiwan’s total investment in the nation. Recently, Vietnamese soil has also welcomed Taiwanese electronic manufacturing plants and renowned international brands like GIANT. In addition to manufacturing, there has been a discernible uptick in the percentage of Taiwanese entrepreneurs investing in Vietnam’s service sector in recent years, climbing from 10.1% to 29.8% during the period from 2018 to 2022. This evolving trend underscores the increasing diversity of Taiwanese businesses investing in Vietnam. Hence, building upon the economic strides achieved thus far, it is foreseeable that Taiwan and Vietnam will forge deeper cooperation in semiconductor and renewable energy industries in the foreseeable future.
During the presidency of Tsai Ing-Wen, Vietnam was identified as one of the important partners in the New Southbound Policy. Presently, Taiwan stands as the fourth-largest foreign investor in Vietnam, while Vietnam holds the position of Taiwan’s third-largest trading partner within the ASEAN region for the year 2023. Notably, Vietnam has ascended to become the second-largest recipient of Taiwan’s overseas investments. Following the recent election in Taiwan, there arises a question regarding the trajectory of Taiwan-Vietnam relations under President William Ching-te Lai’s leadership. However, there exists a high likelihood that President Lai will continue to strengthen ties with Vietnam, given his stated aim during the election campaign to reduce dependence on China and enhance relations with Southeast Asian nations. Hence, while the New Southbound Policy may have evolved under President Tsai, the momentum in fostering relationships with Southeast Asia is expected to persist.
Economic ties between Taiwan and Vietnam hold immense significance, particularly in trade and investment. For instance, in 2022, bilateral trade between the two countries reached record levels, with total import-export turnover nearing $28 billion, resulting in a trade surplus of $17.6 billion. Moreover, Taiwanese entrepreneurs accounted for approximately 8% of the total foreign investment in Vietnam during the same period, with total accumulated investment capital surpassing $36.4 billion. When factoring in third-party investments, Taiwanese businesses’ actual investment capital in Vietnam is estimated to exceed $50 billion. These achievements underscore the robust economic partnership between Taiwan and Vietnam.
Presently, amidst prevailing global development trends, both Taiwan and Vietnam are shifting their focus towards high-growth sectors, particularly semiconductor and renewable energy industries. These sectors hold promise for fostering enhanced cooperation between Taiwan and Vietnam under President William Ching-te Lai’s leadership. It is evident that in 2023, Vietnam ambitiously aimed to become a semiconductor hub, as demonstrated by its efforts to upgrade diplomatic relations with countries such as the United States and Japan to a comprehensive strategic partnership, both of which are supportive of Vietnam’s aspirations to become semiconductor hubs. Taiwan, renowned for its successful semiconductor industry, offers valuable expertise that Vietnam can leverage to achieve its developmental objectives. The Taiwan-ASEAN, India Strategic Investment Partnership Forum held on May 18, 2023, highlighted Vietnam’s promising economic growth prospects, ranging from 5% to 7%, and its gradual transition towards high-technology development. Taiwan’s semiconductor industry expertise, coupled with Vietnam’s strategic location and state support, presents opportunities for collaboration in advancing the semiconductor sector. Additionally, Taiwan’s experience in renewable energy development can complement Vietnam’s efforts to achieve its ambitious environmental goals.
Taiwan, renowned for its successful semiconductor industry, offers valuable expertise that Vietnam can leverage to achieve its developmental objectives, particularly in advancing the semiconductor sector. For instance, Vietnam could benefit from Taiwan’s experience by closely aligning semiconductor industry development with airport infrastructure. Assessments conducted by the Education Department of the Taipei Economic and Cultural Office suggest that Southern Vietnam, with major international airports like Tan Son Nhat (SGN) and the future Long Thanh, presents a suitable location for initial semiconductor development, followed by subsequent expansion to other areas. Drawing parallels from Taiwan’s semiconductor industry evolution, which began in one to two areas in the high-tech Hsinchu region before expanding to Taichung and beyond, forming an interconnected semiconductor factory system, Vietnam could adopt a similar approach. Initiating semiconductor production in high-tech industrial zones such as Ho Chi Minh City and Binh Duong Province, which host Taiwanese industrial clusters, could serve as strategic starting points for Vietnam’s semiconductor industry growth.
To develop the semiconductor industry, Vietnam must address the challenge of a shortage of highly skilled workers. The Vietnamese government has set a target to train 50,000 semiconductor workers by 2030. However, Vietnam currently lacks a complete semiconductor infrastructure and faces challenges in training. Similarly, Taiwan also grapples with labour shortages in this field. The scarcity of talent in advanced chip technology poses a significant challenge to the overall development of the semiconductor industry, particularly considering Taiwan’s global leadership in chip production, with a population of nearly 24 million. With Vietnam’s population of nearly 98 million young and dedicated to learning, Taiwan can support Vietnam in workforce training to meet the demands of building the semiconductor industry. This collaboration can serve as a foundation for Vietnam’s initial steps in this sector. Taiwan is already supporting the development of semiconductor technology expertise at the National University in Ho Chi Minh City and through programs like the INTENSE Program by the Taiwan Ministry of Education. Students in this program receive monthly scholarships and will be placed in positions where businesses have shortages, with specialized courses provided by universities. Taiwanese businesses can also invest in Vietnam, and these students may be sent to Vietnam by Taiwanese companies. This mutually beneficial cooperation addresses the shortage of highly skilled labour in both Taiwan and Vietnam.
Furthermore, faced with the challenges of climate change, the world is moving towards green energy trends. Vietnam has committed to achieving net-zero emissions by 2050 and aims to significantly increase its renewable energy sources to decarbonize the power sector by around 78 per cent. Vietnam has also pledged to eliminate deforestation by 2030 and cease the use of coal-fired power by 2040. Prime Minister Pham Minh Chinh has committed Vietnam to achieving net-zero carbon emissions by 2050 and has called for support from more developed countries to achieve this goal. Vietnam possesses notable advantages, including its long coastline and tropical monsoon climate, which are conducive to abundant renewable energy sources such as wind, solar, small hydropower, ocean, biomass, and geothermal energy.
Meanwhile, Taiwan, as one of the four Asian dragons with a rapidly developing and highly innovative economy, has ambitious plans to increase the proportion of renewable energy in its energy mix and achieve net-zero emissions by 2050. Since 2017, Taiwan’s green industry sector has had an export turnover of $9.829 billion, accounting for 3.1% of the global export turnover. Given its experience, Taiwan can collaborate with Vietnam and leverage its strengths to help develop this promising industry. Taiwanese companies in the energy sector can not only sell energy products but also provide solutions to maximize energy cost savings in lighting and production for Vietnamese businesses. Exhibitions such as the Taiwan Green Industry Exhibition and the Taiwan International Thermal Power Exhibition offer Vietnamese enterprises opportunities to stay updated on trends in green and renewable energy development. This cooperation in the green energy sector also helps Taiwan address its electricity and water scarcity issues in semiconductor manufacturing.
In conclusion, promoting collaboration between Taiwan and Vietnam in high-growth sectors such as semiconductors and renewable energy presents significant opportunities for bilateral cooperation. With Vietnam emerging as a key destination for investment diversification, the prospects for enhanced partnership under President Lai’s leadership are promising.
Ms Tran Thi Mong Tuyen is a Ph.D. scholar at National Chengkung University in Taiwan. Previously, she served as a Fellow at the Ministry of Foreign Affairs of Taiwan and a Visiting Scholar at National Taiwan University. Additionally, she held the position of a Non-resident Fellow at Pacific Forum, a think-tank based in Honolulu, Hawaii, and has been part of the Young Leader program at Pacific Forum since 2012. Prior to that, Ms Tran also worked as a Fellow at the European Union in Luxembourg.
This article was published as part of a special issue on ‘2023 to 2024: Looking Back, Thinking Ahead‘.
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The Taiwan Research Hub is a research centre based at the University of Nottingham focusing on all aspects of contemporary Taiwan. The Taiwan Research Hub does not privilege political positions and the views published on Taiwan Insight are those of the author and not the institute.
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