The Vietnam government appears to have backtracked on a major investment initiative involving US chipmaker Intel Corp.
On Tuesday, Ho Chi Minh City announced it was courting a $3.3 billion investment from Intel, which could boost the city’s 2023 foreign direct investment to $7.4 billion. However, just one day later, the government revised the statement to remove any mention of Intel and reduced the overall projected investment total to $4.5 billion.
“If successful in attracting $3.3 billion of additional investment from Intel Products Vietnam, Ho Chi Minh City would receive $7.4 billion worth of foreign direct investment this year,” said Pham Tuan Anh, an official in the city’s planning and investment department.
No new investments, says Intel
Bloomberg reports that Intel did meet with government officials to discuss the investment at the Saigon Hi-Tech Park. However, Intel said in a statement, “Vietnam is an important part of our global manufacturing network, but we have not announced any new investments.”
Intel has a significant presence in Vietnam, with a chip assembly and test manufacturing facility in Ho Chi Minh City. According to reports, Intel has invested an estimated $1.5 billion into this facility, which is its biggest worldwide. In 2021 alone, the company invested $475 million in Intel Products Vietnam.
Despite the announcement, Vietnam remains on track to become an integral part of the global chip and tech industry. Over the last year, Vietnam has become an increasingly attractive destination for investment, especially for tech companies looking to diversify away from China.
The rise of Vietnam as a chip and tech hub
Vietnam’s commitment to technology and industry has made it an attractive destination for foreign companies, and cheaper labor costs compared to China and other Asian countries make it a popular choice for tech firms.
Recently, Apple supplier BOE Technology Group announced plans to invest $400 million to build two factories in Vietnam. Samsung and LG Electronics already have factories in the country.
Last year, Samsung CEO Roh Tae-Moon met with Vietnamese Prime Minister Pham Minh Chinh and announced a US$850 million investment to manufacture semiconductor components in Thai Nguyen province.
According to an analysis by East Asia Forum, this makes Vietnam one of only four countries — alongside South Korea, China and the United States — that produce semiconductors for the world’s largest memory chipmaker.
“For Vietnamese leaders, semiconductors represent both economic opportunities and national security interests. Entry into the semiconductor value chain means tapping into a global market forecasted to reach $1.4 trillion by 2029 with a 12% compounded annual growth rate. It also strengthens local skills and expertise, fosters the development of associated high-tech industries and raises the domestic value-added in electronics production,” the analysis said.