Vietnam’s broader vision for semiconductor space

Coherent, a global semiconductor giant with operations spanning 117 locations in 25 countries and territories, has been steadily deepening its footprint in Vietnam and now employs some 2,000 people in the country, a figure that Mr. Steve Rummel, Senior Vice President of Engineered Materials at the Coherent Corporation, expects “to grow to more than 6,000 by fiscal year 2028.” He credits this ambitious growth to Vietnam’s increasingly dynamic industrial ecosystem - a blend of the government’s competitive incentive policies, proactive local support, and the rollout of modern, green, and energy-efficient industrial parks.

As more leading global corporations set up operations in Vietnam, demand for advanced manufacturing capacity, technical expertise, and a robust supporting ecosystem is rising sharply. For businesses around the country, this wave of transformation presents not just a challenge but also a defining opportunity - to step into the high-tech arena and move beyond the boundaries of traditional manufacturing.

Semiconductors on the rise

Mr. Rummel pointed to what he called a “crucial factor” behind Coherent’s long-term commitment to Vietnam - the country’s strengthening protection of intellectual property. “This is absolutely essential for us, as much of Coherent’s core process lies in proprietary know-how,” he explained. “In our more than 20 years of operations in Vietnam, many of our innovations and breakthroughs have come from our local teams.”

Coherent first set foot in Vietnam in 2005, with a facility at the VSIP Industrial Park in southern Binh Duong province (now part of Ho Chi Minh City). From that modest start, its operations expanded rapidly. In 2024, the company launched a new facility in neighboring Dong Nai province - a VND3 trillion ($115 million) investment completed in just 18 months - to strengthen its semiconductor manufacturing capacity. The 47,000 sq m plant currently employs around 200 people and will continue to expand as new product lines come into being.

Building on Vietnam’s maturing industrial ecosystem and a rising generation of skilled engineers, Coherent has broadened its scope beyond its original manufacturing base. Today, it produces everything from silicon carbide substrates for semiconductors and precision opto-mechanical assemblies to ceramic components used in chip-making equipment. “These products demand highly-specialized skills, such as laser machining, ultrasonic processing, and diffusion bonding,” Mr. Rummel said. “That’s why we are partnering with universities to develop tailored training programs that cultivate a new generation of top-tier engineers.”

He emphasized that this collaboration is part of a broader vision. “Coherent is deeply intertwined with Vietnam’s semiconductor ecosystem and will continue to invest strongly to grow alongside the country’s development,” he affirmed.

Meanwhile, Mr. Samson Khaou, Executive Vice President, Asia-Pacific, at Dassault Systèmes, noted that the French technology powerhouse has been present in Vietnam for two decades through its partner network. In 2022, just after the pandemic, the company established an official office in Vietnam - “a decision rooted in our confidence in the country’s vision and growth strategy,” he said. “The next chapter in our journey is to help shape what we call the ‘generative economy’, where the real and virtual worlds converge, powered by generative AI.”

Under this new model, he continued, value creation shifts from physical products to immersive, software-defined experiences. He believes businesses will move from linear operations to “generative enterprises”, where human and virtual workforces collaborate seamlessly with AI assistants.

Dassault Systèmes sees 3D universes - safe virtual environments where companies can design and test digital twins of products, processes, or even entire factories - as a foundation for the next wave of industrial innovation. “We aim to lead the world in industrial AI, and Vietnam’s AI vision aligns perfectly with our global strategy,” Mr. Khaou said. “That’s why we are committed to being a long-term, trusted partner of Vietnamese industries.”

Becoming a tech gateway

Another major semiconductor equipment maker, BE Semiconductor Industries (Besi), has also placed Vietnam on its global map. Specializing in backend semiconductor equipment and expanding into the frontend segment, Besi began building its manufacturing capacity in Vietnam two years ago, complementing its hubs in Malaysia and China. According to Mr. Henk Jan Jonge Poerink, Senior Vice President for Global Operations at Besi, Vietnam’s emergence marks a significant opportunity for local companies to plug deeper into the global semiconductor supply chain.

Besi’s operating model is highly specialized: research and development (R&D), along with new product design, are based in Europe in three main centers; maintenance engineering is carried out in Singapore; and all manufacturing is concentrated in Asia, now including Vietnam. This expansion reflects the growing demand in the semiconductor industry, where equipment spending is projected to surpass $1 trillion over the long term.

According to Mr. Poerink, to join Besi’s supply chain, Vietnamese companies must meet two key areas of capability: manufacturing and technical expertise. Suppliers must be able to design modules, conduct rigorous testing, use materials to exact standards, manufacture precision mechanical parts and cables, and manage a flexible supply chain. Every module delivered to Besi must pass strict inspection before approval.

These complex systems demand suppliers with advanced technical skills and internationally-compliant manufacturing standards. The company’s strategy in Vietnam will follow a phased approach: starting with specialized tooling, then producing key components, and ultimately assembling complete systems for both domestic and global markets. This approach underscores the strong demand for local suppliers capable of meeting global technical and quality standards and willing to invest in precision technology; a critical step in positioning Vietnam as a strategic link in the global semiconductor equipment value chain.

Global semiconductor companies place similar requirements on their partners in Vietnam. Mr. Yang Tong, Senior Director, Supplier Account Management, Global Supply Chain, at Applied Materials, said that to become a supplier, companies must meet the sector’s exceptionally high standards, which demands precision, speed, and reliability far beyond most others.

Applied Materials operates large-scale production facilities in the US and Singapore, with additional plants in Germany, Israel, Italy, South Korea, and Taiwan (China). The company generates some $27 billion in annual revenue, invests 10-15 per cent in R&D, and employs 35,000 people in 24 countries and territories. Mr. Tong explained that its multi-tiered, highly-specialized supply chain requires partners capable of ultra-precision machining, component handling and packaging in Class 100 cleanrooms, and high-speed operations that fully comply with technical standards.

Its equipment is made up of thousands of components, so precision in every detail isn’t just an advantage it’s the minimum requirement to ensure quality and reliability, Mr. Tong added.

Speaking to Vietnam Economic Times / VnEconomy, Mr. Clark Tseng, Vice President of Market Intelligence at SEMI, said that as Vietnam’s chip design capabilities develop, corresponding manufacturing capabilities will naturally follow. He believes that Vietnam’s infrastructure is fairly strong compared with other emerging markets but stressed that the government must continue investing. “Good infrastructure creates the right environment to attract more foreign investment, especially in semiconductor manufacturing,” he said, adding that this will further improve the overall ecosystem.

Experts emphasize that to meet the demands of global semiconductor companies, Vietnam must continue investing in ultra-precision manufacturing, advanced surface processing, strict cleanroom management, and specialized material supply chains. For traditional manufacturers, these requirements are a significant challenge, but they also represent an opportunity to enter the advanced semiconductor equipment sector.