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America flogging dead horse on industry transfer

By GUANCHA.CN | China Daily | Updated: 2024-01-31 07:56

Workers produce chips for export at an electronic enterprise in Jiangsu province. [Photo/Xinhua]

The US government has recently stated that Vietnam's chip industry is one of the priorities for assistance under Washington's CHIPS Act, expressing the hope that Vietnam can "benefit" from the United States' efforts to reduce its dependence on China. This is obviously intended to drive a wedge between China and Vietnam.

Last year, Vietnam planned to build its first chip manufacturing plant. But US industry insiders warned that the cost was too high. And on the other hand, in the year and a half since it was signed, the CHIPS act has been poorly implemented.

Although more than 170 companies have submitted applications for subsidies under the act, only two companies have received small grants so far. Neither of them produces advanced chips. Due to delays in receiving subsidies and harsh conditions, Taiwan Semiconductor Manufacturing Company and Samsung Electronics have successively announced that their US factories will postpone production.

The US is urging Vietnam to attract investment in such industries as clean energy and rare earths, which can be used for electric vehicles and battery production. Although 15 US companies, including semiconductor companies, have expressed interest in investing $8 billion in total in Vietnam's clean energy infrastructure, the final cooperation will depend on Vietnam's progress on renewable energy regulations.

Vietnam's rare earth metal reserves rank second in the world after China, but it's unclear how much can be mined. Currently, the US is restoring its own mines, has reached agreements with 13 countries to coordinate financial support for Vietnam's rare earth industry, and has offered to help Vietnam investigate its mineral deposits. Vietnam's abundant cheap labor is also an asset that the US values.

Analysts also believe that weak global demand is causing Vietnam to face its worst factory downturn in a decade, while many problems such as bureaucracy and power outages are also plaguing the operations of various industries in the country. Therefore, market expectations for the benefits of relocating supply chains from China to the Southeast Asian country are generally low.

In fact, industrial transfer is a natural process. In the process, Southeast Asian and South Asian countries and other developing countries will be more closely integrated with China's manufacturing industry in the future. In the next 10 to 20 years, China will still hold the title of "world factory" and remain the world's manufacturing hub.


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