Vietnam is winning the chip race India wanted to lead

India has rolled out aggressive incentives and cleared proposals to build a semiconductor ecosystem, but global capital is flowing elsewhere. For two of the world’s biggest chipmakers, Intel and Samsung Electronics, Vietnam has emerged as the preferred destination for semiconductor packaging expansion.

Intel has already scaled its assembly, test and packaging (ATMP) operations in the country, anchoring one of its largest facilities there. Samsung, while yet to formally announce its plans, is in talks to set up a multi-billion-dollar chip packaging unit.

India, for its part, has been pushing similar projects under the India Semiconductor Mission and has secured a marquee investment from Micron Technology. Yet beyond Micron, large global chipmakers remain largely absent, raising a key question: why is Vietnam converting intent into investment faster than India?

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A 20-year head start

Vietnam’s edge is not recent, it is the result of decades of policy continuity and execution.

“Vietnam was not as early as Malaysia in semiconductors, but it was an early mover compared with India in electronics-led semiconductor back-end manufacturing. Intel announced its Vietnam assembly and test plant in 2006, completed it in 2010, and later added more investment. Samsung entered Vietnam in 2008 and built a massive electronics manufacturing base. That gave Vietnam a 15–20 year compounding advantage in factories, export logistics, workers, vendors, and government handling of large FDI,” said Pareekh Jain, CEO at EIIRTrend & Pareekh Consulting.

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This long runway has allowed Vietnam to build a dense ecosystem of suppliers, skilled labour and export infrastructure, critical ingredients for semiconductor packaging.

More than subsidies

India’s semiconductor pitch is financially compelling. Under the first phase of its mission, the Centre offers up to 50% capital support, with states adding another 20–25%.

But industry experts say subsidies alone are not decisive.

“Vietnam's High-Tech Incentives (2026 Law) provides preferential tax rates where high-tech and semiconductor firms typically enjoy a 10% CIT rate for 15 years (vs. the standard 20%). It also offers extreme tax holidays, with major projects receiving a 4-year tax exemption (0% tax), followed by a 50% tax reduction for the next 9 years. There is also special strategic incentives for ‘special’ large-scale semiconductor projects… where the CIT can be as low as 5% for up to 37 years,” said Danish Faruqui, CEO of Fab Economics and Co-Chair of Global Semiconductor Policy Council.

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Vietnam also offers up to 15-22 years of land rent exemptions, along with support for training and R&D, lowering operational costs over the long term.

Execution is the real differentiator

For chipmakers, speed and predictability often matter more than headline incentives.

“There is a sense that (in Vietnam) things tend to work as expected. Facilities get built, suppliers turn up, shipments leave on schedule. Not perfectly, but predictably. That predictability has been earned over years of repeated execution, not declared through policy,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research.

Vietnam’s industrial zones, such as Saigon Hi-Tech Park and Hoa Lac Hi-Tech Park, offer plug-and-play ecosystems where land, approvals, utilities and logistics are integrated.

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“The investor steps into something that feels prepared,” Gogia added.

Ecosystem advantage

In semiconductor packaging, the plant is only one part of the equation. The surrounding ecosystem is what makes it viable.

“An existing electronics manufacturing ecosystem is foundational for attracting chip packaging investments because packaged chips are the primary ingredients for electronic devices. Hence, companies prefer placing these facilities near the factories that will use them to minimise logistics costs and lead times,” Faruqui said.

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Vietnam benefits from its proximity to China and integration into East Asian supply chains. It is also part of ASEAN and has free trade agreements with the EU, Japan, and South Korea, allowing duty-free movement of components, a key advantage in the low-margin ATMP segment.

"India’s electronics manufacturing base has expanded meaningfully over the last decade and its design talent is among the strongest globally. But when you narrow the lens to semiconductor packaging specifically, the ecosystem is still forming," added Gogia.

India’s execution gap

India’s intent to become a semiconductor hub is clear, but execution remains uneven.

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Delays due to multi-layer approvals, coordination challenges and infrastructure readiness continue to slow progress. In a sector where time-to-market is critical, this gap becomes decisive.

Unless India can move faster from approvals to ground execution, experts warn that investments will continue to flow to ecosystems that are already operating at scale.