Intel gave up, "Vietnam suffered a major setback"

According to a report by the American Diplomat website on November 9, US chip manufacturer Intel has shelved an investment plan that would have almost doubled its production scale in Vietnam. This is a major setback for Vietnam’s ambition to squeeze into the global semiconductor supply chain.

Intel currently has a factory in Ho Chi Minh City with a total investment of US$1.5 billion. It was put into use in 2010 and is its largest chip assembly, packaging and testing factory. According to the Vietnam Express website, the factory has a total of 2,800 employees and has shipped more than 3 billion products in more than 10 years since its opening.

In February this year, Reuters reported that Intel was considering investing about $1 billion to expand the factory. The company is also considering Singapore and Malaysia as alternative investment destinations.

Reports this week cited a person familiar with the matter as saying Intel had decided to abandon its expansion plans in Vietnam "around July." U.S. officials communicated the decision to "a certain group of American businessmen and experts" shortly after President Biden's state visit to Vietnam in September.

The reasons for Intel's decision were unclear, but Reuters cited a second person familiar with the matter. This person participated in two meetings between U.S. companies and top Vietnamese officials in recent weeks. At those meetings, Intel raised "concerns about stable power supplies and heavy bureaucracy," according to the person.

These two problems have always existed for foreign investors in Vietnam. Vietnam's rapidly growing economy has put severe pressure on the country's power network in recent years. In June this year, unseasonably hot weather led to Vietnam imposing power cuts, shutting down industrial parks in the country's northern provinces. Leading global manufacturers such as Foxconn and Samsung have factories in these parks.

At the same time, Vietnam’s bloated bureaucracy has been a persistent problem for foreign companies doing business in Vietnam.

Intel's decision is a major setback for Vietnam. Over the past year, the Vietnamese government has been launching a full-scale charm offensive against foreign chip manufacturers, hoping to attract investment in the three main stages of chip manufacturing, including the construction of extremely expensive chip foundries.