Ho Chi Minh City seeks US$492 million of investments in high-tech sector

[HO CHI MINH CITY] Vietnam’s financial and economic hub Ho Chi Minh City is hoping to attract up to US$492 million worth of investments in various research, production and service projects in the high-tech sector.

This includes about US$190 million for five projects related to electronics and semiconductors, and US$302 million for a massive data-centre project.

According to a plan recently announced by the People’s Committee of Ho Chi Minh City, the Saigon Hi-tech Park – one of three such parks in the country – will set aside a combined area of about 10 hectares for the proposed projects. No further details were given.

As at September 2022, the Saigon Hi-tech Park had attracted more than US$12 billion in domestic and foreign investment.

The latest call comes as Ho Chi Minh City – the most populous city in Vietnam, contributing nearly 25 per cent of total gross domestic product – seeks more investments in green development.

Last month, the city’s government presented 28 green projects calling for a total investment of 160 trillion dong (S$8.8 billion) from local and foreign investors.

Top investment destination

According to the latest official figures, Ho Chi Minh City led Vietnam in the number of new foreign investment projects in 2023 and January this year.

The Ho Chi Minh City Statistics Office said total foreign investment capital – including new grants, adjustment and capital contribution, share purchases, and capital contribution purchases – reached US$5.85 billion in 2023. This was an increase of over 48.5 per cent from the year-ago period and accounted for 16 per cent of the total US$36.6 billion poured into Vietnam.

Singapore was once again the top source of foreign investment last year in the city, registering 203 new projects with an investment capital of US$172.7 million, accounting for 28.9 per cent of the total.

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In January, a senior US official said that 15 US chips companies had expressed interest to invest US$8 billion in Vietnam.

The United States regards Vietnam’s semiconductor sector as one of its top destinations for funding from its US$52 billion Chips Act, although much depends on the South-east Asian country’s commitment to renewable energy development.

Last September, during US President Joe Biden’s visit to Vietnam, Washington and Hanoi signed a deal on semiconductor supply chains to expand Vietnam’s semiconductor ecosystem in support of US industry. The US will also provide US$2 million in seed funding to train Vietnamese workers in chip assembly, packaging and testing.

Over the years, major US semiconductor giants, such as Intel and Amkor, have built large facilities in Vietnam, with many looking to diversify their production bases beyond China.

As foreign investment continues to pick up steam, Vietnam’s leaders have expressed a desire to court global players to build the country’s first wafer fab, which could be worth between US$10 billion and US$50 billion.

Separately, Savills noted in a recent commentary that Vietnam is also regarded as one of the countries with the fastest-growing cloud and data centre industries in the world.

Since 2021, the British real estate consultancy said it has fielded an increasing number of enquiries from foreign data-centre operators hunting for locations and potential joint-venture partners in Vietnam.

Vietnam is currently home to 28 data centres, with a combined capacity of 45 megawatts and 44 service providers.

The size of Vietnam’s data-centre market is expected to nearly double to US$1.04 billion by 2028, from US$561 million in 2022. This represents a compound annual growth rate of about 10.8 per cent over the six-year period, according to US market research and consulting company Arizton.