Vietnam Unlikely to Displace China in Global Chip Ecosystem Despite US Wish

The US and Vietnam held an innovation and investment summit in Hanoi on Monday after the announcement of a couple of high-profile deals in the semiconductor sector. Chinese observers said that the eagerness of the US to woo Vietnam despite its minor role in the global semiconductor ecosystem reflects the Biden administration's desire to further decouple from China by turning Vietnam into a chess piece.

However, the US can't achieve a decoupling from China or alienate China and its trade partners because the Chinese and US economies are highly interwoven, and complementary China-Vietnam economic and trade cooperation has maintained sound momentum, observers said.

They urged the US to reduce its hostility toward China and instead deepen cooperation with the world's second-largest economy to make the cake bigger to benefit all.

Senior executives from Google, Intel, US semiconductor product packaging and test services provider Amkor Technology, US semiconductor contract manufacturer GlobalFoundries and Boeing attended the summit, Reuters reported on Monday.

US President Joe Biden reiterated at the meeting that the US and Vietnam are deepening cooperation in cloud computing, semiconductors and artificial intelligence, and stressed Vietnam is crucial for critical mineral supplies, according to the report.

"While Biden stresses 'cooperation' with Vietnam, the real purpose is to rope the Southeast Asian country into being part of its strategy of containing China and help solve the problem of US de-industrialization," Fu Liang, an independent tech analyst, told the Global Times on Monday.

Although Vietnam's semiconductor industry has witnessed relatively sound development in recent years, it still lags far behind China in most aspects, Fu said, noting that the industry in Vietnam is repeating what China did about 10-20 years ago.

In a bid to strengthen semiconductor supply chains, the White House said Amkor will commence operations at its state-of-the-art factory in Vietnam in October.

California-based Synopsys is launching a semiconductor design and incubation center and Marvell will establish a world-class semiconductor design center in the Southeast Asian country.

US semiconductor firms are forced to invest in Vietnam amid the US-initiated tech war against China, since they are unwilling to leave China given the improved business climate in the country and relatively low production capacity in other Asian countries such as India, Fu said.

"Given the large size of the Chinese and US economies and their highly interwoven nature, it would produce little effect for the US to push ahead 'economic decoupling' with China in the long run," Zhuang Guotu, head of Xiamen University's Southeast Asian Studies Center, told the Global Times on Monday.

There is no country in the world that has such a complete industrial system as China, and the US will continue to rely on China for many products, Zhuang said, urging the US to reduce hostility against China and ensure that ideological and social system differences will not affect bilateral economic cooperation.

"Vietnam has stressed on multiple occasions that growing the China-Vietnam comprehensive strategic cooperative partnership is its diplomatic priority and a top priority in the country's foreign affairs," Chinese Foreign Ministry spokesperson Mao Ning said at a regular press briefing on Monday.

In order to broaden pragmatic cooperation, China and Vietnam held a trade and economic cooperation forum in Beijing in June, which attracted about 400 representatives from the government and business communities.

There is vast potential for the development of China-Vietnam economic and trade cooperation, Zhuang said. The stronger political mutual trust between the two countries provides a solid foundation, while the full implementation of the Regional Comprehensive Economic Partnership injects new vitality and will bring into play their comparative advantages, he said.

In developing bilateral relations, countries should not target a third party or undermine regional peace, stability, development and prosperity, Mao said. "When dealing with Asian countries, the US must respect the common aspiration of countries in the region of seeking stability, cooperation and development, and must abide by the basic norms of international relations and abandon its hegemonic and Cold War mentality," she said.

September 12, 2023