Vietnam plans two new undersea cables as the U.S. lobbies hard for Hanoi to avoid using Chinese companies

Vietnam is rapidly becoming a technological hub as Hanoi embarks on its digital infrastructure development strategy. It is also becoming a strategic country as the U.S. and China fight to control the undersea cable network in the region.

Early in October, Vietnam announced plans to deploy two undersea internet cables by the end of 2025, in line with Hanoi’s plans to become a regional digital hub, including fiber optic internet connectivity with speeds of at least 1Gbps to the entire population by 2030, as well as testing of 6G services by the end of 2025 and a rapid expansion of AI data centers and hyperscalers.

Vietnam plans the deployment of 10 undersea cables by 2030

As part of its digital infrastructure development strategy, Vietnam plans a further eight undersea cables by 2030. However, it has come under diplomatic pressure from Washington, which is pushing for Vietnam to avoid Chinese cable-laying firm HMN Technologies (which the U.S. considers a subsidiary of Huawei Technologies), in particular, as well as other Chinese companies in its plans.

There are only four major companies in the world that both manufacture and lay subsea cables: SubCom (the U.S.), NEC Corporation (Japan), Alcatel Submarine Networks (France), and HMN (China). The two cables planned for 2025 are still set to go out for tender and officials in the U.S. and China are unsure how the process will work out.

Part of Vietnam's plans revolve around the fact that its existing undersea cable system is aging and prone to breakdown – the country has suffered a number of outages in recent years caused by its aging undersea infrastructure. There have also been claims of Chinese sabotage, as China looks to assert its dominance in the South China Sea and wider region.

Washington lobbying Hanoi hard for undersea cable tenders

In the past, Vietnam has not been averse to dealing with China. However, a Reuters investigation claims that officials from Washington and Hanoi have had several meetings over Vietnam’s plans for its undersea cable expansion, with sources claiming that the U.S. has put significant pressure on Vietnam to avoid the use of HMN and other Chinese entities^[1].

Vietnam is becoming a significant destination for Western investments. The country has plans to construct multiple AI data centers and attract hyperscalers, and also wants to position itself as a colocation provider. In turn, this requires robust connectivity on a global basis, hence the expansion of its undersea cable network.

In 2024, it has also seen Meta announce plans to produce its next-generation virtual and augmented reality headsets in Vietnam, a collaboration between Ericsson and local operator MobiFone on a 5G Innovation Hub, and a deal that will see Taiwanese company Foxconn’s Singaporean unit invest $551 million to produce smart entertainment products and smart system equipment in Vietnam.

Vietnam becoming a strategic country in the U.S.-China technology and trade standoff

It means that Vietnam is becoming a strategic location in the U.S.-China technology and trade battle, with Washington lobbying hard to persuade Hanoi that it would be better served by choosing more experienced cable-laying companies from the West – HMN was only incorporated in 2008, compared to SubCom, for example, which has been around since 1955.

Washington is also concerned about the potential for espionage and has warned that if Hanoi gave the tender to HMN U.S. companies could be discouraged from investing in Vietnam, which could slow its digitization plans.

In April, Viettel, a global telecom operator owned by the Vietnamese military, and Singtel, Singapore’s incumbent telecom operator, signed an MOU to co-develop an undersea cable linking the two countries that would bypass disputed waters in the South China Sea.

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^[1] https://www.reuters.com/business/media-telecom/inside-us-push-steer-vietnams-subsea-cable-plans-away-china-2024-09-17/