Local and foreign chip manufacturers expand their presence in Vietnam — companies move to Southeast Asia as tensions simmer between China and the U.S.

According to Reuters, Hana Micron, a South Korean firm specializing in assembly, testing, and packaging (ATP) of semiconductors, is expanding its presence in Vietnam after some of its customers requested the company move production away from China. Because of this, the company is investing 1.3 trillion South Korean Won (approximately $923.5 million) for the next couple of years to boost its packaging output of legacy memory chips.

The primary chip packaging companies—Amkor Technology, Hana Micron, and Intel—have poured billions of dollars into Vietnam to increase their back-end manufacturing capacity. Beijing and Washington trade words and sanctions over global and regional strategic goals, including a race in semiconductor manufacturing and AI technologies.

In addition, U.S. firm Amkor Technology is spending $1.6 billion building a million-square-foot campus—the company’s most extensive and advanced facility—that will deliver “next-generation semiconductor packaging capabilities.” One source familiar with the matter even said that some of the equipment the company will install in the new factory comes from some of its factories in China. However, the company hasn’t officially confirmed this. Aside from them, Intel’s largest back-end facility is also located in Vietnam.

The country expects to receive over $2.5 billion in investments between these three companies, and the U.S. plans to invest some of its CHIPS Acts funds into its former adversary. Even local companies are getting in on the semiconductor action, with FPT, one of the largest Vietnamese IT companies, building a 1,000-square-meter, $30-million testing factory with ten testing machines to operate in 2025.

In addition to these ongoing projects, two other Vietnamese firms plan to enter chip manufacturing. Sovico Group, a Vietnamese investment firm, is searching for international partners to build an ATP facility in Danang. At the same time, Viettel, a state-owned corporation, wants to establish the country’s first foundry by 2030.

Back-end manufacturing is the assembly and packaging of chips, including wafer cutting, die attachment, interconnection, encapsulation, and testing. Although it is far from the cutting-edge and glamorous world of front-end manufacturing, with its ever-shrinking process node, back-end processes are still a crucial part of chip manufacturing, turning a wafer from a lithography machine into an entirely usable product.

Vietnam reportedly owned just 1% of the global ATP market a couple of years ago; however, massive foreign investment in its semiconductor industry means it expects to have an 8% to 9% market share by 2032. Furthermore, tech giants like Nvidia and Apple are eyeing the country as a future location for their manufacturing capabilities, adding to Intel’s existing presence. Hanoi also aims to have at least six fabs by 2050, making the country a major chip maker.

As tensions between China and the U.S. continue, companies looking for cheap labor and a more stable political climate leave China, Taiwan, and South Korea. With Vietnam’s investment in its semiconductor industry, it seems poised to receive this influx of chip manufacturers.