Startup nation, startup Vietnam

By Do Cao Bao

Sat, February 1, 2025 | 8:00 am GMT+7

Vietnam is the only chopstick culture that has yet to become a semiconductor powerhouse, but now the opportunity is coming very clearly, writes Do Cao Bao, a board member of FPT, Vietnam's leading tech corporation.

Countries that rise up

In the late 1970s, Narayana Murthy, an Indian software engineer, set out the aspiration to change the image of the country of flute players and snake charmers to the image of engineers providing 24-hour software services to the whole world, especially to the U.S. and Europe.

More than 40 years later, India has become the world's number one software services powerhouse, with more than 10 million software professionals, along with a series of the world's largest software services companies, including TCS, Infosys, Wipro, HCL Tech, and Tech Mahindra, which are giants with 138,000 to 612,000 employees.

Surprisingly, the capitalization of TCS, India's largest software services company, is almost equal to that of Toyota and Samsung, the two largest technology giants in Japan and South Korea.

In addition, most of the CEOs of the world's largest technology companies in the U.S.'s Silicon Valley are Indians, such as giants Microsoft, Google, IBM, YouTube, Micron, Adobe, and Palo Alto Networks.

In the early 1980s, Taiwan had a strategy to transform from an agricultural production-based economy to a world-class telecommunications and information technology-based one.

Lee Kwok-ding, former Minister of Economy and former Minister of Finance, was trusted by the Taiwanese administration to be the "chief architect" of the economic transition. Lee sought out Taiwanese talents in the semiconductor field, and Morris Chang, former vice president of Texas Instruments, was entrusted with the responsibility of being chairman of Taiwan Semiconductor Manufacturing Company Limited (TSMC).

Forty years later, TSMC became the second largest semiconductor company in the world, and Taiwan became as rich as Japan and South Korea, in which the semiconductor industry has a very special position not only in the Taiwanese economy but also in the global economy.

In 2023, Taiwan's semiconductor exports reached $167 billion, accounting for 38.5% of its total goods export value. The capitalization of the 20 largest semiconductor companies in Taiwan reached $1,500 billion, twice as high as Taiwan's total GDP ($752 billion). Taiwan holds almost "the throat" of the world's semiconductor industry, making up more than 60% of the world's chip production and 90% of the global high-tech chip production.

Pillars that bring Vietnam into the era of national "rising up"

Seeing India rise up based on software services and Taiwan grow to become a “dragon” based on semiconductor technology, the question is whether Vietnam can do the same as India and Taiwan, and if so, which industry and technology will be the fulcrum and growth driver for the whole country?

Let’s go back 25 years ago. At the end of 1998, FPT launched a software export strategy with the determination to “export or die.”. At that time, FPT had no capital, no technology, no human resources, and no customers; neither FPT nor Vietnam had an international brand in software.

No one believed that FPT or Vietnam could make software; even the World Bank did not believe it. However, with a strong determination and a deep belief in itself and in the qualities of Vietnamese people, FPT started preparing human resources, bringing the Indian programmer training program into teaching, followed by opening FPT University to train human resources for itself.

FPT went to Bangalore, the software capital of India, and then to Silicon Valley in the U.S. to open a company. When the $1 million fund for software export was exhausted, the Japanese market brought in quality contracts and customers.

Today, Vietnam has become the second largest software-exporting country in Asia (after India), providing software services to more than 30 countries around the world, including the U.S., Europe, Canada, Australia, Japan, and South Korea.

In 2024, more than 1,500 software companies brought the country over $7 billion in foreign currency. This is a truly meaningful figure; it is a pity that the import-export statistics only take into account the goods passing through customs gates, while software is not considered goods and is not included in the statistics.

Remember that $800 billion of goods import-export only brings a trade surplus of about $26.5 billion, while $7 billion of exported software brings a trade surplus of up to $5.5 billion. In addition, the labor productivity of software exports reaches about $40,000 per person per year, five to eight times higher than other industries.

If 25 years ago, we exported software with nothing, with many doubts, many difficulties, and countless challenges that seemed impossible to overcome, now with the existing foundation of the information technology and telecommunications industry, especially software export, along with the strong explosion of AI and global semiconductors, with the geopolitical position of the country, with the stature and potential of the nation, we can confidently say that software, AI, and semiconductors are the fulcrum, the driving force for growth, the pillars that bring Vietnam into the era of national "rising up".

AI is the future of the world; the huge demand for AI resources globally in the next 30 years is indisputable. Doing AI requires two important qualities: mathematics and software. We Vietnamese have both of those qualities, and reality has proven that.

According to statistics from the International Mathematical Olympiad, Vietnam ranked seventh in the world in the medal tally, just behind the U.S., Russia, China, South Korea, Hungary, and Romania. In the world's most prestigious Fields Mathematics Award, seven countries won from two to eight medals, 14 countries won one medal, and Vietnam was one of those 14 countries.

In terms of software services, Vietnam has truly become the fifth most powerful country in the world, with more than 500,000 software engineers providing software services to more than 30 countries around the world. These are very valuable resources for the transition to AI and semiconductors in the coming period.

Today, chips (semiconductors) are not only found in computers, cars, rockets, airplanes, and ships, but also in all the devices around us, from mobile phones, televisions, refrigerators, air conditioners, washing machines, gas stoves, induction cookers, and microwave ovens to vacuum cleaners, floor cleaners, irons, gate locks, and children's toys.

In 2023, the amount of money China spent on importing semiconductors was $349 billion, more than the amount of money they spent on importing crude oil ($338 billion). That is why people think that in the 21st century, semiconductors play an important role like oil in the 20th century. The shift of production out of China and, recently, the shift of part of semiconductor production out of Taiwan is a reality that happened and is happening.

There is a very thoughtful fact that Taiwan, South Korea, Japan, and China account for more than 90% of global semiconductor foundry revenue. People are still trying to explain why East Asian countries, with chopstick cultures, are the countries with the most achievements in the field of semiconductors. Is there anything related to national character and culture?

Few people know that the process of "dragonization" of Japan, South Korea, and Taiwan was closely linked to the achievements of the semiconductor and electronics industries and, at the same time, possessed a particularly important factor: the support from Silicon Valley, that is, from the U.S.

Our Vietnam is the only chopstick culture that has yet to become a semiconductor powerhouse, but now the opportunity to become a country with an important position in the global semiconductor and AI supply chain is coming very clearly. We definitely cannot miss it.

That is why I deeply believe that the establishment of the U.S.-Vietnam comprehensive strategic partnership, the trend of shifting the global semiconductor supply chain, Vietnam's geopolitical position, and the country's human resources of software and mathematics are the four fulcrums, the four pillars that will bring Vietnam into the era of national "rising up".