Vietnam has become a strategic battleground for the US and China, as both countries vie for influence in the Southeast Asian nation’s booming electronics sector. While China’s investment in Vietnam has historically dwarfed that of the US, recent shifts in geopolitics and supply chain strategies have opened new opportunities for American influence.
China’s dominance in the ICT sector, supplying 30% of US imports as of April 2023, has prompted many electronics firms to diversify their supply chains. Vietnam, with its “Made in Vietnam” rules of origin and strategic location, has become a prime destination for Chinese companies seeking to bypass US trade barriers.
However, the US is not standing idly by. According to The Atlantic Council, the Biden administration aims to strengthen ties with Vietnam through increased investment, talent development, and R&D collaboration. This push aligns with Vietnam’s own ambition to move up the value chain in manufacturing.
Despite China’s substantial investment in Vietnam, reaching $8.2 billion in 2023, the US still holds a competitive edge in technology investment and talent development. American firms like Qualcomm and NVIDIA are investing in R&D centres in Vietnam, nurturing local talent, and promoting a more balanced approach to technological innovation.
However, China’s influence remains significant. As the Atlantic Council points out, “China can still influence on how Chinese-based companies operate there.” This influence, coupled with China’s aggressive friendshoring strategy, could further entangle Vietnam’s industries with China.
To counter this, the US is bolstering its anti-dumping and anti-subsidy enforcement, and exploring options to lift trade duties for key industries. Additionally, the CHIPS Act provides a mechanism for the US to invest in Vietnam’s semiconductor ecosystem, further solidifying its position as a “dependable supply chain partner.”
The ongoing tug-of-war between the US and China underscores Vietnam’s strategic importance in the global electronics landscape. As both countries increase their investment and engagement, Vietnam finds itself in a unique position to leverage these competing interests to its advantage. The future of Vietnam’s electronics sector will likely be shaped by how it navigates this complex geopolitical landscape, balancing its relationships with both China and the US to achieve its own economic and technological aspirations.
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