Intel Cancels Planned Investment in Vietnam, Dealing Blow to Country’s Chip Industry Ambitions
Intel has decided to shelve its planned investment in Vietnam, according to a person familiar with the matter. The investment had the potential to nearly double the U.S. chipmaker’s operations in the country, posing a setback to Vietnam’s ambitions in the chips industry.
Vietnam has positioned itself as an alternative to China and Taiwan, aiming to capitalize on political risks and trade tensions with the United States. It is home to Intel’s largest factory worldwide for chip assembly, packaging, and testing. The country had hoped for further expansion from Intel, especially after President Joe Biden announced support deals for Vietnam’s chips industry during his visit in September.
However, shortly after Biden’s visit, U.S. officials informed a select group of businessmen and experts that Intel had decided against the expansion plan. The decision was reportedly made in July, but the company did not disclose the reasons for calling it off. Concerns over power supply stability and excessive bureaucracy were raised by Intel in recent meetings with Vietnamese officials.
Intel’s decision is a blow to Vietnam’s growing aspirations to play a larger role in the global semiconductor industry. The country has been engaging in talks with chipmakers, attempting to attract firms looking to diversify their supply chains. The cancellation of the investment comes after Intel announced significant investments in Europe in June.
Meanwhile, Vietnam experienced power shortages in June, leading to temporary production suspensions for many manufacturers. Intel is also expanding its chip packaging investment in Malaysia, a major rival in Southeast Asia.
During Biden’s visit, the White House announced initiatives and investments by U.S. chip companies, including Amkor, Synopsys, and Marvell. However, Intel was not mentioned, indicating that its future investments in Vietnam were uncertain.
Intel’s potential investment in Vietnam was estimated to be around $1 billion, aimed at boosting its existing $1.5 billion factory in the country. The Vietnamese government had mentioned plans to attract an additional $3.3 billion investment from Intel but later removed the reference from its official portal after media reports emerged.
Intel and other multinational companies have urged the Vietnamese government to provide substantial incentives worth millions of dollars as part of a global tax overhaul. Discussions on the implementation of the tax and subsidies, slated for next year, are still ongoing.
In response to inquiries, Intel declined to comment on the cancellation of the investment but stated that Vietnam would continue to be a critical part of its global manufacturing operations. The U.S. embassy in Hanoi and the Vietnamese government did not provide any comments on the matter.
Chung Seck, a partner at law firm Baker & McKenzie Vietnam, emphasized that previous investments by Intel in Vietnam did not guarantee further investments, highlighting the uncertainty surrounding the situation.
(Reporting by Francesco Guarascio; Additional reporting by Max Cherney and Khanh Vu; Editing by Miyoung Kim and Miral Fahmy)
