Nvidia’s Vietnam deal: a game changer or just noise?

IN VIETNAM, Google Trends – a feature that shows what people are searching for online in real-time – is usually dominated by lottery results and football matches. But Nvidia, the US$3.3 trillion chipmaker fuelling the artificial intelligence (AI) boom, cracked the top searches earlier this month after its CEO Jensen Huang visited Hanoi to finalise a deal Vietnam had been eagerly anticipating.

Huang sat down for a casual street beer with Vietnam’s Prime Minister Pham Minh Chinh after the US-based company officially committed to establish its first R&D centre in the country and acquired VinBrain for an undisclosed amount. The acquisition of the Vingroup-backed AI startup confirmed months of speculation about the move.

As the dust settles, attention has turned to Nvidia’s reasons for acquiring VinBrain and its impact on Vietnam’s tech scene.

Why VinBrain?

The startup was founded in 2019 by Steven Truong, a veteran engineer who worked at Microsoft. Vingroup’s most recent audited financial statements show that before the deal, it held a nearly 50 per cent stake in VinBrain.

VinBrain, along with carmaker VinFast and smartphone unit VinSmart (which was shut down in 2021), was part of Vingroup’s ambitious push into technology and manufacturing. Despite offloading VinBrain to Nvidia, the conglomerate continues to retain VinAI, which specialises in generative AI.

VinBrain’s main product, DrAid, uses computer vision to enhance imaging diagnostics. According to the company, around 200 hospitals – mostly in Vietnam – have adopted the product. DrAid was also the first AI-powered X-ray diagnostic tool from South-east Asia to earn certification from the US Food and Drug Administration (FDA).

Like other Vingroup subsidiaries, VinBrain has obviously benefited from the conglomerate’s ecosystem, which includes Vinmec hospitals nationwide. But the country’s relatively lax data privacy regulations also helps VinBrain, an industry expert with close ties to Vingroup notes. Collecting patient data is relatively easier in Vietnam compared to other developed countries, the source added.

However, VinBrain is still a loss-making startup after operating for five years.

Its revenue doubled in 2023 to US$477,000 while its losses narrowed by 23 per cent to US$3 million, according to data from WiGroup, a financial data provider. Over the past four years, VinBrain has accumulated nearly US$12.9 million in net losses, more than half of its registered capital of US$24.7 million.

That’s unlikely to be a major concern for Nvidia, as the VinBrain deal has strengthened its ties with the Vietnamese government and the country’s largest conglomerate.

Although Vingroup did not formally announce the VinBrain deal, it awarded the VinFuture Grand Prize a day later to Huang and alongside four AI professors for their contributions to deep learning.

The prime minister also attended the VinFuture awarding event. When Pham visited Nvidia’s headquarters in Silicon Valley last year, he also invited Huang to invest in Vietnam.

In November, FPT, Vietnam’s largest publicly listed tech company, launched an AI factory powered by Nvidia chips in Japan.

Uncertainties abound

Despite Huang breaking the Vietnamese internet, Nvidia’s next steps in the country remain uncertain. The tech giant has not disclosed plans for the VinBrain team, details about the R&D centre’s size, or the timeline for its operations.

Tech in Asia has reached out to both VinBrain and Nvidia, but they declined to participate in this story.

So far, Nvidia has listed 11 job postings in Vietnam – all them for remote working, with half not specifying a particular city. This suggests that the company has not established an official office in Vietnam.

Chief tax officer Mark Hoose has been appointed as chairman of VinBrain, according to an updated enterprise registration certificate dated Dec 13. Truong remains the company’s CEO.

“When global corporations have done mergers and acquisition deals, they usually had a clear plan for the next steps. However, in Nvidia’s case, it seems they may not have finalised their planning and simply made the announcement during their CEO’s visit,” explains Nguyen Xuan Tai, president and CEO of software production firm Naiscorp.

While local media reported that Nvidia plans to establish an AI data centre alongside the R&D facility in Vietnam, the company’s official statement made no mention of it.

In comparison, when Nvidia began building an R&D facility in Taiwan in 2023 – a key hub for global chip manufacturing and Huang’s birthplace – the local government announced that the company would invest approximately US$540 million and hire 1,000 employees over a five-year plan.

Vietnam was the second stop on Huang’s South-east Asia tour after Thailand, where he promoted sovereign AI – AI systems developed, deployed, and controlled within a specific nation’s jurisdiction.

Cautious optimism

Still, this deal was definitely a big win for Vietnam’s tech ecosystem.

For Vietnam-based Vinnie Lauria, founding partner of Golden Gate Ventures, Nvidia’s decision to establish an R&D centre proves that the country’s engineers can compete with those in Silicon Valley.

While this “puts Vietnam on the global technology map”, Lauria points out that AI adoption among businesses in Vietnam remains relatively low compared to neighbouring markets such as Singapore.

Nguyen of Naiscorp welcomes the spotlight that Nvidia brings to Vietnam, citing its positive impact on startups such as his. “More attention from foreign funds on Vietnamese engineers and startups means a brighter fundraising outlook,” he said, adding that investors are likely to be more active next year as interest rates go down.

Startup fundraising in Vietnam has fallen to its lowest level since 2018, both in terms of total investment and the number of funding rounds. Vietnamese startups have attracted only US$200 million in 2024 to date, a 60 per cent drop from the previous year, according to data from Tech in Asia.

At the same time, some industry stakeholders recognise the importance of being cautiously optimistic.

For AI startups, the presence of Nvidia has no immediate impact, according to GraphicsMiner CEO Hoang Minh Phuong. He also noted that FPT’s AI factories using Nvidia chips primarily cater to corporate clients. His startup, meanwhile, has opted to build its own servers to cut costs.

Nguyen notes that Naiscorp relies on foreign cloud services hosted overseas to train AI models. Due to power shortages, Vietnam lacks a standard hyperscale AI data centre. Such facilities require at least two independent power sources, but Vietnam currently depends on a single electricity distributor, state-owned EVN.

The limited scale of the domestic market is another barrier, making it difficult for data centre providers in Vietnam to compete on price with larger international players such as AWS, Microsoft Azure and Google Cloud, Nguyen said.

Duong Minh Tam, former deputy head of the Saigon Hi-Tech Park (SHTP) management board, is hopeful that Nvidia’s R&D centre could help upskill Vietnamese engineers. However, he is not optimistic about broader changes in the country’s tech workforce as most local firms are still focused on outsourcing projects.

“It may take decades for us to catch up with advanced countries in terms of high-tech human resources,” said Duong, who was also a member of Vietnam’s negotiation team that secured Intel’s investment for Ho Chi Minh City nearly two decades ago. TECH IN ASIA