Vietnam Introduces Incentives of Initial Costs for Semiconductor and AI R&D Projects

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Under the Government's Decree No. 182/2024/ND-CP, dated December 31, 2024, which focuses on the establishment, management, and utilization of the Investment Support Fund, high-tech industries, particularly in the semiconductor and artificial intelligence (AI) sectors, will be encouraged to develop.

Illustrative photo: The electronic circuit assembly and testing factory of Intel Products Vietnam Co., Ltd. Vietnam.

Under the decree, enterprises investing in research and development projects in these two sectors will be eligible for financial support of up to 50% of their initial investment costs.

Beyond the exclusive support for semiconductor and AI giants, other tech enterprises are also eligible for general assistance. These include high-tech enterprises, firms with high-tech product manufacturing projects, and those investing in R&D centers or applying advanced technology.

General support includes funding for training and workforce development, R&D costs, fixed asset investments, high-tech product manufacturing, and infrastructure development. Other cases are decided by the Government.

This initiative is designed to create favorable conditions for Vietnamese businesses to seize opportunities in the global value chain. Semiconductor and AI industries are considered two key fields with significant potential to shape the future of global technology, ranging from electronic device manufacturing to the development of automation and AI-driven solutions.

The Investment Support Fund, managed by the Ministry of Planning and Investment and established under Decree 182, will primarily assist businesses that meet specific conditions regarding project implementation capacity, commitment to adopting advanced technologies, and contributions to sustainable development goals.

Eligible projects must demonstrate high feasibility, a potential to generate substantial added value and alignment with Vietnam’s socio-economic development strategy.

Notably, research and development center projects must belong to the priority list of high technologies and require a minimum investment capital of VND 3 trillion (US $117.8 million), with at least VND 1 trillion (US $39.2 million) disbursed within three years from the date of investment approval.

In a 2024 report on drafting the decree, the Ministry of Planning and Investment revealed that numerous major corporations had looked into investment opportunities in Vietnam but shifted to other countries due to the lack of specific regulations.

Some large-scale high-tech projects also stalled, awaiting policy responses, and paused new investments or expansions in the absence of suitable support measures. For instance, LG temporarily suspended its plan to invest in a new US %5 billion electronic device manufacturing project.

The government expects these policies to help Vietnam establish a strong position in the high-tech sector while attracting additional foreign investments. Decree 182/2024/ND-CP took effect on December 31, 2024, and applies from the 2024 fiscal year onward.

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