A chronic shortage of engineers in Vietnam is emerging as a major challenge to the growth of its semiconductor industry and to U.S. plans of fast-tracking the Southeast Asian nation as a chips hub to hedge against China-related supply risks.

Semiconductors are expected to be a focal point when U.S. President Joe Biden visits Hanoi from Sept. 10 with the goal of formally elevating ties between the two countries. He will offer Vietnam support to boost its chips production, U.S. administration officials said.

"Friendshoring" segments of the strategic semiconductors industry has been one of Washington's key inducements to persuade Vietnam's communist leaders to agree to formally upgrade relations. Hanoi was initially reluctant about the move over fears of an adverse reaction from China.