Supporting industries catch new wave to make breakthroughs

According to the Vietnam Association of Supporting Industries (VASI), 93 percent of its members are small- and medium-sized private enterprises, with an average number of more than 200 employees working in the areas of mechanical engineering, mold manufacturing, automation, production of plastics - rubber, electricity - electronics, materials, software, and industrial services, etc.

In recent years, the capability of VASI members and Vietnamese supporting industry enterprises has increased significantly

In recent years, with the support programs from the Vietnam Industry Agency under the Ministry of Industry and Trade, the capability of VASI members and Vietnamese supporting industry enterprises has increased significantly, better meeting the requirements of upstream companies in Vietnam and export demand, including downstream industries, such as motorbikes, electronics, automobiles, mechanical engineering, etc. The sector that participates the most in global supply chains is metal components and technical plastics. In contrast, the sector participating the least is electronic components.

However, the Vietnamese supporting industry sector is having many opportunities to expand development areas. The emerging fields in Vietnam that support industry enterprises are very interested in are electric vehicles, semiconductors and renewable energy, apart from fields supplying materials for aviation and aerospace sectors.

Accordingly, VASI member enterprises have produced many types of components for electric vehicles, and more than 100 different components for wind turbines, for leading multinational corporations in these fields. VASI also plans to establish a specialized semiconductor association including a number of FDI and Vietnamese companies.

Nguyen The Nghia, General Director of Viettel Manufacturing Corporation - a supplier for Boeing aircraft, said that the supporting industry for aviation requires high qualifications and absolute precision. Precision mechanics in this industry must meet world standards and be certified by airlines. Therefore, there are only about five enterprises in Vietnam that meet these standards.

However, if they can join the aerospace supply chain, they will grow stronger. The order value will be very high.

On the other hand, Vietnam is becoming a destination for many foreign enterprises investing in semiconductor manufacturing. For example, the Amkor Technology Vietnam factory with a total investment of US$1.6 billion; Hana Micron Vina with a total investment of US$600 million, expected to reach US$1 billion by 2025; Intel Vietnam, more than US$1 billion; and Samsung with an additional investment of US$3.3 billion to make semiconductor components in Vietnam... It is forecast that by the end of 2024, the Vietnamese semiconductor industry value will have exceeded US$6.16 billion and the sector will need 10,000 engineers each year.

Vietnam currently has about 40 to 50 microchip design companies with a total of about 5,000 engineers. It is estimated that the human resource demand of this industry will increase by 10 to 15 percent each year, meaning that about 500 new engineers are needed each year, mainly design and testing engineers.

Recently, Vietnam and the US agreed on a Joint Statement on Comprehensive Strategic Partnership, which recognized Vietnam’s potential to become a key country in the semiconductor industry, and take initiatives to develop semiconductor human resources. The US Government will grant a funding of US$2 million to Vietnam, which is an opportunity for Vietnamese supporting industry enterprises to make a breakthrough. VASI believes that policies for new sectors should be drafted soon. The policies need to be foreseen, have clear directions and facilitate domestic production, not to be passive like previous consumer industries (motorbikes, cars, home electronics, phones, etc.). Specifically, policies related to development orientation and priorities, including requirements on localization rates, should be issued soon for emerging industries such as wind turbines, solar panels, semiconductor industry, electric cars, and aerospace. Thereby, supporting industry enterprises have a basis to prepare resources and orient long-term investment.

Now, the MoIT has submitted to the Government a proposal to amend Decree 111/2015/ND-CP on the development of supporting industries. Accordingly, the list of supporting industry products has been updated with many new products related to digital technology.

For example, in the group of high-tech supporting industry products, the MoIT has added electronic microchips to develop new-generation smart devices; digital cameras, audio-visual equipment integrated with the Internet of Things (IoT); component clusters and spare parts for power generation equipment systems from new energy and renewable energy; solar panels, high-performance batteries; electric motors; component clusters and spare parts for satellites, aviation systems, space systems, flight control equipment, global positioning devices, robots; semiconductor materials, super durable materials, etc.