In mid-September, Vietnam bypassed the intermediate strategic partnership tier and elevated the United States directly to a comprehensive strategic partnership (CSP). The unprecedented upgrade not only manifests a striking rise in trust between the two partners but also offers pivotal opportunities for the two to fortify their relations, one of which is new technology collaboration. Leaders on both sides have recently emphasized that the CSP centers on technology, innovation, and investment.
The United States is working to deepen ties with Vietnam because of its critical role within its strategic blueprint to safeguard the semiconductor supply chain from potential dangers posed by China’s dogged pursuit of technological dominance. During a July visit to Hanoi, U.S. Treasury Secretary Janet Yellen underlined that “Vietnam has emerged as a critical node in the global semiconductor supply chain.” To fortify technology cooperation, the United States has pledged to help Vietnam develop its own semiconductor industry and provide training in semiconductor assembly, testing, and packaging (ATP). American companies such as Amkor, Onsemi, and Intel Corporation are also deepening their engagement in Vietnam, especially by expanding chip assembly and test manufacturing facilities.
On the occasion of U.S. President Joe Biden’s recent visit to Hanoi, the United States lauded Vietnam for its potential “as a partner in ensuring the semiconductor supply chain is diverse and resilient.” The two countries highlighted the importance of discovering fresh avenues that could “attract industry investments and expand the technical workforces in both countries.” Biden also announced numerous business deals in semiconductor, aerospace, and infrastructure, heralding a “new stage” in the economic relationship between the United States and Vietnam. The Biden administration also pledged that Vietnamese technology companies would be listed on the U.S. stock market while picking “new semiconductor partnership” as the new pillar for collaboration in the first portion of the CSP’s statement. The two countries recently inked a Memorandum of Cooperation on Semiconductor Supply Chains, Workforce, and Ecosystem Development, which would help Vietnam utilize the American International Technology Security and Innovation (ITSI) Fund to develop workforce and infrastructure needs and expand its semiconductor capacity ecosystem, particularly in semiconductor design centers and training.
Vietnam, for its part, has sought to bolster its technological industry while entangling itself in Southeast Asia’s supply networks, particularly in electronics. The country has advanced digital transformation and invested heavily in its digital sector, with the dual goals of strengthening domestic technology capabilities and attracting foreign investment. The Vietnamese government also offers a preferential corporate income tax rate of 10 percent for fifteen years and 17 percent for ten years for large manufacturing ventures, especially those in the high-tech industry. Moreover, Vietnam is now home to Intel Technology Group’s largest chip assembly and testing plant and ranks third in chip sales to the U.S. market, behind Malaysia and Taiwan. A significant chunk (10 percent) of the United States’ entire chip import volume comes from Vietnam, making Hanoi a crucial partner in Washington’s “friend-shoring” policy for semiconductors. Moreover, through collaboration in the Developing Electronics & Leading Technology Advancement Partnerships (DELTA) Network, Vietnam is well-positioned to collaborate with the United States and like-minded regional partners to build a robust technology supply chain.
Vietnam would be sensible to join forces with the United States to benefit from the superpower’s technological edge and highly skilled professionals. The Southeast Asian country has been implementing a series of reform policies, commonly referred to as “renovation” or “Đổi mới” in Vietnamese, since 1986. The country’s economy has gradually restructured and transitioned from a centralized to a more open market system. Now more than ever, policies centered on technology and innovation are needed to revitalize Vietnam’s economic growth. Pham Minh Chinh, the Prime Minister of Vietnam, has recently underscored that bolstering supply chains and expanding semiconductor chip production are at the heart of the country’s economic development. As a result, Vietnam requires both state-of-the-art equipment and skilled workers to operate it.
While enhancing its ties with the United States in emerging technologies, Vietnam has also attempted to cut down on its technological dependency on China. In 2017, Vietnam offered an open welcome to Chinese corporations to participate in the country’s burgeoning high-technology industry. Nevertheless, after six years, this overture is conspicuously absent from economic deliberations between Hanoi and Beijing. Instead, Vietnam has made concern-driven attempts to attract high-quality American investments while proactively seeking engagement with Washington’s semiconductor ecosystem through high-tech collaborative frameworks outlined in the CSP’s agenda. For Vietnam, investment and technological support are essential to assisting the nation in escaping the foreseen middle-income trap.
This discernible shift indicates Vietnam’s growing preference for the United States over China as a destination for high-tech investment at a time when the technological chasm between Washington and Beijing on supply chains is widening. Given the current sanctions and constraints imposed by the United States and Western countries on China’s high-tech sector, Vietnam is in danger if it decides to engage closely with China. Not to mention maritime tensions between the two neighbors in the South China Sea, Vietnam is also cognizant of China’s sway over trade and technology. These concerns prompt Hanoi to decide who will be its crucial partner in promoting high-tech economic development.
However, due to Vietnam’s reliance on China for imported components, pundits hold a gloomy view of Hanoi’s ability to disengage from Beijing economically. However, by making this statement, the significance of Vietnam’s endeavors to enhance the synergy of its supply chain is undermined. Instead of conceptualizing Vietnam’s ongoing strategy as “decoupling” from China, it is more prudent to recognize that the country is actively pursuing a “de-risking” strategy. This strategy involves a discerning process of mitigating economic vulnerabilities stemming from excessive reliance on the Chinese market rather than giving Beijing a wide berth or turning inwards. This process also involves efforts to diversify Vietnam’s supply chain market while at the same time avoiding severing ties with the economic giant. Having the highest level of diplomatic relations with the world’s two largest economies, China (since 2008) and the United States (since 2023), is a nuanced indicator of Vietnam’s efforts to pursue a two-pronged strategy that is strengthening economic security and bolstering its regional stature.
Vietnam has risen to be Washington’s “friend-shoring base” and “key production site for semiconductors and other high-tech products.” Accordingly, the country stands to gain access to American cutting-edge technology and investment. Yet, Vietnam has grappled with a talent shortage and over-reliance on raw materials and components from Beijing. Nonetheless, the United States is not immune to these difficulties. There will be a shortfall of roughly 67,000 skilled workers in Washington’s semiconductor industry by 2030. In addition, one-third of essential components used in manufacturing American-made technological products come from China.
To address these challenges, the United States should support projects and initiatives that could help cultivate talent in Vietnam’s high-tech sectors through funding from the U.S. Agency for International Development (USAID), universities, institutions, organizations, and foundations. Additionally, the Fulbright University Vietnam, sponsored by the United States and renowned for its science and engineering, economics, mathematics, and computing programs, should serve as the vanguard of Vietnam’s efforts to train a skilled workforce in this sector. To sum up, Washington’s promise to help Vietnam acquire technological capabilities and address the country’s lack of experienced technicians depends on the synergy of financial and human resources support.
De-risking supply chains is gaining ground as geopolitical clashes may entail far-reaching geoeconomic ramifications, and this is precisely what Washington and Hanoi are adopting to shield the high-tech supply chain from China’s rising power and influence. In an era of geopolitical uncertainty, friend-shoring with like-minded partners has become an indicator of economic friendship, and the United States and Vietnam are working together to develop technological ties that will help solidify the Indo-Pacific region’s supply chains. If the U.S.-Vietnam CSP is to reach its full potential, collaboration on new and cutting-edge technologies should become its cornerstone and perhaps even the “signature” of the U.S.-Vietnam alignment.
Huynh Tam Sang is a Lecturer at the Faculty of International Relations, Ho Chi Minh City University of Social Sciences and Humanities, a Young Leaders Program member of the Pacific Forum, and a Research Fellow at the Taiwan NextGen Foundation. He tweets at @huynhtamsang2.
Vo Thi Thuy An is a Research Assistant at Ho Chi Minh City University of Social Sciences and Humanities and a Research Associate at Social Life Research Institute.