Vietnam expands chip packaging footprint as investors reduce China links

Foreign companies are expanding capacity in Vietnam for testing and packaging chips while domestic firms are eyeing investments, as a shifting of industrial activity away from China gathers pace due to trade tensions with the West, executives said.

The semiconductor back-end manufacturing sector, which is less capital-intensive than more strategic front-end chipmaking in foundries, is currently dominated by China and Taiwan, but Vietnam is among the fastest-growing countries in the $95 billion segment.

Hana Micron’s vice president for Vietnam, Cho Hyung Rae, told Reuters the company was expanding in the Southeast Asian country to meet requests from industrial clients who wanted to have some production capacity moved away from China.

The South Korean company is investing about 1.3 trillion won ($930.49 million) until 2026 to boost packaging operations for legacy memory chips, a company official based in South Korea said.

U.S.-headquartered Amkor Technology announced last year a $1.6 billion plan to build a 200,000 square metre (2.2 million sq. ft) factory which it said would become its most extensive and advanced facility, “delivering next-generation semiconductor packaging capabilities.”

A business executive with direct knowledge of Amkor’s operation in Vietnam said some of the equipment installed in the new plant had been transferred from factories in China.