The United States and Vietnam plan to elevate their relations as US President Joe Biden visits the country, with officials saying the focus of the talks will be semiconductors and critical minerals.
The US has been pushing for the upgrade for months as it sees the Southeast Asian manufacturing dynamo as a key country in its strategy to secure global supply chains from China-related risks.
The overhaul might be shadowed, however, by a report on Saturday that Vietnam was in talks with Russia over a new arms supply deal that could trigger US sanctions.
The New York Times cited a March Vietnamese finance ministry document laying out plans for Hanoi to pay to modernise its forces through a Vietnamese-Russian oil venture in Siberia.
Reuters has seen, but not been able to authenticate, documents describing talks for a credit facility that Russia would extend to Vietnam to buy heavy weaponry, including anti-ship missiles, anti-submarine aircraft and helicopters, anti-aircraft missile systems and fighter jets.
A spokesperson for Vietnam's foreign ministry did not respond to multiple requests for comment on the documents, which show Moscow pushing for months for a loan deal that would bypass Western sanctions on Moscow, and Vietnam showing "interest".
Hanoi is in similar talks with multiple arms suppliers including the US.
In recent weeks, Vietnam has engaged in several high-level defence meetings with top Russian officials.
The upgrade will include a security dimension, Jon Finer, the US principal deputy national security adviser, told reporters on Sunday, while on the plane with Biden to Vietnam from a Group of 20 summit in India.
He said he had no arms deals to announce at this stage but stressed that the US and its partners could offer Vietnam help to diversify away from Russian military supplies, an offer he said Vietnam was receptive to.
That would help Vietnam reduce military reliance on Moscow, "a relationship we think they are increasingly uncomfortable with", Finer said.
A half-century after a lengthy and brutal war, the US is to elevate Vietnam to the same diplomatic tier as China and Russia, Finer noted, as Biden and other US officials have said.
Vietnamese officials have shown optimism about the expected upgrade, despite initial concerns over how giant neighbour China would react.
Top Chinese officials, possibly including President Xi Jinping, are expected to visit Vietnam in the coming days or weeks, officials and diplomats said, as Hanoi seeks to maintain good relations with all superpowers.
Biden's visit comes as bilateral trade and investment ties are growing and a long-simmering territorial dispute between Vietnam and China heats up in the South China Sea.
Highlighting Vietnam's growing importance as a "friendshoring" destination for US technology companies, executives from Google, Intel, Amkor , Marvell, GlobalFoundries and Boeing are expected to meet on Monday with Vietnamese tech executives and Secretary of State Antony Blinken in Hanoi.
Semiconductors are the centrepiece of an action plan to be adopted during Biden's visit, adding concrete deliverables to the diplomatic upgrade, a US official said.
Another key issue is strengthening supply chains of critical minerals, especially rare earths, of which Vietnam has the world's largest deposits after China, according to US estimates, officials said.
Two people familiar with the plans said an agreement on rare earths was expected during Biden's visit, which ends on Monday when he flies back to America.