Intel ‘ready to build microchip plant in Vietnam’

Intel, the world’s largest microchip maker, is seeking to set up a $605m (€500m, £355m) plant in Vietnam to design, assemble and test chips, a project that would be a huge boost to the Communist-ruled country’s fledgling high-tech industry.

Phan Huu Thang, a senior official in Vietnam’s planning and investment ministry, said in Hanoi Intel had submitted an application for a project licence, though a source familiar with the project said approvals were probably a formality.

“I don’t think there is going to be too much [more] negotiation about the licence,” he said. “They’ve been discussing it for nearly nine months.”

Intel declined to comment on the Vietnamese official’s statement, which was also reported by the state-controlled Youth newspaper yesterday. Youth reported that the plant would employ 2,000 people and would be built on a 46.7 hectare lot in a high-tech park near Ho Chi Minh City, the country’s commercial capital.

Henry Nguyen, managing general partner of IDG Ventures Vietnam, an IT venture capital fund, said an Intel investment would have a huge effect on the country’s technology industry.

“This is the infrastructure that creates jobs, intellectual capital and human resources development that will fuel innovation in the future,” he said. It would have “a huge effect on Vietnam’s credibility in general”.

Intel has been assessing Vietnam’s potential as a site for a microchip testing facility for several years, but it had been reported the company was deterred initially by fears the country’s creaky infrastructure could not support a rapid production turnround.

Paul Otellini, Intel’s CEO, made a two-day trip to the country in June, when he confirmed that Vietnam was being considered as a possible site for a factory, though he said the company had no immediate investment plans.

Vietnam’s authorities have also been working hard to woo Intel for what would be one of the country’s biggest foreign investment projects.

In addition to the assembly and testing plant, Intel is also said to be interested in tapping Vietnamese engineers for the design and development of specialised embedded systems chips.

With a population of more than 80m and an economy that grew 8.4 per cent last year, Vietnam is south-east Asia’s fastest-growing personal computer market, with ownership climbing to more than 1.5m this year from a mere 288,000 five years ago.

Domestic sales of computers and related products rose by about 30 per cent last year from 2004.