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US-China Scuffle Forces South Korea To Relocate China-based Chips Firms To Vietnam

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This move is part of a broader trend to reduce reliance on China amid escalating trade tensions with Western nations.

Amid Donald Trump’s presidential triumph, reports have surfaced that international semiconductor manufacturers are increasingly relocating operations from China to Vietnam, anticipating intensified U.S. sanctions on China’s semiconductor industry. This strategic shift bolstered Vietnam’s global semiconductor supply chain position. Chip companies are expanding their testing and packaging capacities in Vietnam. This move is part of a broader trend to reduce reliance on China amid escalating trade tensions with Western nations.

The intensifying U.S.-China tech rivalry has prompted South Korean semiconductor giants like Samsung Electronics and SK Hynix to reassess their manufacturing strategies. Since 2022, these companies have curtailed expansion plans in China, redirecting investments to Vietnam. This shift has accelerated recently, with SK Hynix shelving plans to boost DRAM chip production at its Wuxi plant and Samsung reducing capacity at its Xi’an NAND flash memory facility.

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South Korea’s Outsourced Semiconductor Assembly and Test (OSAT) company, Hana Micron, is significantly expanding its Southeast Asian investments. The company plans to invest approximately 1.3 trillion South Korean Won (around $930 million) by 2026 to enhance its packaging operations for legacy memory chips in Vietnam. Similarly, Amkor Technology, a U.S.-headquartered semiconductor packaging firm, announced a $1.6 billion investment to build a 200,000-square-meter factory in Bac Ninh, Vietnam. This facility is set to become Amkor’s most extensive and advanced, delivering next-generation semiconductor packaging capabilities.

Samsung Electronics is significantly expanding its semiconductor investments in Vietnam, following Samsung Display’s recent establishment of a 2.4 trillion Korean won (approximately USD 1.7 billion) OLED plant in the country. On the other hand, South Korean semiconductor firm Signetics plans to invest $100 million in constructing a facility within the Ba Thien I Industrial Park in Vinh Phuc Province, northern Vietnam. The factory, covering five hectares, is expected to commence operations by October 2025. It will produce components such as flip-chip, MCM, BGA, and FBGA, essential for memory chips, GPUs, and televisions. 

Speaking about South Korea’s trade relationship with China, South Korea’s economic relationship with China has experienced notable shifts in recent years. China’s share of South Korea’s total exports declined from 25.9 percent in 2020 to 19.7 percent in 2023. In 2024, the United States surpassed China as South Korea’s top export destination for the first time in two decades. Additionally, South Korea recorded an $18 billion trade deficit with China in 2024, marking the first bilateral deficit in 31 years.

South Korea is diversifying its supply chains to mitigate reliance on China, particularly in critical minerals essential for green technologies. In May 2023, South Korea and Canada signed a Memorandum of Understanding to enhance cooperation in critical mineral supply chains, clean energy transition, and energy security.

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