HANOI: Having established itself as an electronics manufacturing hub, Vietnam is now seeking to move further up the semiconductor value chain, as global industry giants including Intel, Amkor, Hana Micron, Coherent and VDL expand their presence in the country.
The opportunity is significant, but whether semiconductors can help Vietnam escape the middle-income trap will depend on more than the number of factories built or billions of dollars in foreign direct investment (FDI) attracted.
The key question is whether Vietnam can turn semiconductor investment into higher productivity, stronger domestic technological capabilities and greater value added. Vietnam’s inclusion in the World Bank’s upper-middle-income group from July 2026 marks an important milestone.
Under the new classification, upper-middle-income economies have a gross national income per capita of US$4,636 to US$14,375, while high-income economies must exceed US$14,375 per person.
Yet the journey from upper-middle-income to high-income status will be considerably harder.
The World Bank estimates that Vietnam needs to more than triple its current per capita income over the next two decades to achieve high-income status by 2045 while sustaining average annual growth of around 6%.
This means that a growth model driven primarily by capital accumulation, low-cost labour and production expansion will no longer be sufficient.
Le Xuan Sang, deputy director of the Institute of Vietnam and World Economy, said Vietnam could break out of the middle-income trap only by raising its level of scientific and technological development and moving beyond low-value segments.
As labour costs rise and demographic advantages weaken, higher productivity, technology and innovation will become increasingly important drivers of growth. — Viet Nam News/ANN
