Currently, Vietnam has Intel's largest chip assembly, packaging, and testing factory. In February of this year, it was revealed that Intel plans to add $1 billion worth of investment in Vietnam to enhance its chip cluster effect in Vietnam.
However, the latest news suggests that Intel has shelved its new investment plan in Vietnam.
Sources told the media that Intel made this decision around July and did not provide detailed reasons. But another source involved in a meeting between US companies and the Vietnamese government pointed out that Intel is concerned about the stability of Vietnam's electricity supply and excessive bureaucracy.
This summer, under the test of record breaking extreme temperatures, Vietnam faced a severe shortage of electricity, which also affected the electricity consumption of enterprises. Some production factories of Apple suppliers such as Hon Hai and Li Xun Precision, as well as Samsung Electronics' factories in northern Vietnam, have received requests from local power companies to consider alternating power outages or at least reducing electricity consumption during peak periods.
Intel's decision is undoubtedly a major blow to Vietnam's ambitious chip development plan. The Vietnamese government has been seeking to expand the scale of the chip industry in recent years, aiming to introduce well-known chip manufacturers. In addition to packaging and other back-end processes, it also hopes to make breakthroughs in front-end processes such as chip manufacturing, achieving the goal of producing semiconductors locally.
Intel's suspension of investment undoubtedly has a strong signaling effect and may pose greater challenges to the development of Vietnam's chip industry.
Investment considerations
Baker& Chung Seck, a partner at McKenzie Vietnam Law Firm, pointed out that people cannot assume that Intel has already invested in Vietnam and will continue to increase its investment.
In the latest interview, Intel declined to comment and repeatedly emphasized that with the growth of semiconductor demand, Vietnam will continue to be an important component of Intel's global manufacturing business.
At the same time, the US Embassy in Hanoi and the Vietnamese government have remained silent on this matter.
Outside Vietnam, Intel announced a large-scale investment in Europe in June, at a time when Vietnam was experiencing power shortages and many manufacturers were forced to temporarily suspend production.
Malaysia is another investment destination for Intel in Southeast Asia, and the local chip packaging industry continues to develop rapidly with Intel's support. Malaysia is also one of Vietnam's main competitors in Southeast Asia.
Another speculation in the industry about Intel's suspension of investment is related to the Vietnamese government's global tax reform plan. It is said that Intel and other multinational companies are putting pressure on the Vietnamese government to provide huge subsidies to compensate for new taxes. So far, Vietnam's tax and subsidy plans are still under discussion.