According to a person briefed on the plans, Intel has postponed a planned investment in Vietnam that could have roughly doubled the U.S. chipmaker’s facility there, dealing a blow to the nation’s expanding aspirations in the semiconductors industry.
The centre of Southeast Asian electronics manufacturing, which houses Intel’s largest chip assembly, packaging, and testing facility globally, has been counting on the company to continue growing there, particularly since Joe Biden signed agreements to boost Vietnam’s chip sector while visiting in September.
In light of political unrest and trade difficulties with the US, Vietnam is eager to present itself as a rival to China and Taiwan.
However, one of the meeting attendees told Reuters that immediately after Biden’s visit, American officials notified a small group of American businessmen and specialists that Intel had shelved an expansion proposal.
The source, who wished to remain anonymous due to the sensitive nature of the information, stated that Intel had taken that choice sometime in July.
According to the person, the corporation did not provide a reason for cancelling the expansion. However, a second source, who was present at two different meetings in the past few weeks between top Vietnamese officials and American businesses, claimed that Intel had voiced worries regarding excessive bureaucracy and the stability of power supply.
Deputy Prime Minister Tran Luu Quang of Vietnam attended one of those sessions last week in Hanoi.
While Intel declined to comment when questioned about the plan, it did tell Reuters that “Vietnam will continue to be a critical part of our global manufacturing operations as demand for semiconductors grows.”
The American embassy in Hanoi chose not to respond. Requests for comments were not answered by the Vietnamese government.
Intel’s reversal would be detrimental to Vietnam’s increasing aspirations to take a more significant part in the global semiconductor industry. In an attempt to entice companies looking to diversify their supply chain, it has been in talks with chipmakers.
Intel made the choice in response to news that it would be making significant investments in Europe in June and that power problems in Vietnam that same month forced numerous manufacturers to temporarily halt production.
Additionally, Intel is increasing its chip packaging investments in Malaysia, one of Vietnam’s principal rivals in Southeast Asia.
The White House highlighted new projects and investments by American chip businesses, such as Marvell, Synopsys, and Amkor, during Biden’s visit to Hanoi. No mention was made of Intel.
According to Chung Seck, a partner at Baker & McKenzie Vietnam, “you cannot take for granted that Intel will invest more here just because it has already invested.” Seck made this statement to Reuters.
In February, Reuters revealed that Intel was considering a potential $1 billion investment in Vietnam to expand its $1.5 billion facility there. When Reuters asked about the potential investment plan at the time, Intel responded, “We have not announced any new investments, but Vietnam is an important part of our global manufacturing network.”
Following media coverage, the official webpage of the Vietnamese government subsequently removed a mention of ambitions to get an extra $3.3 billion in investment from Intel.
The Vietnamese government is under pressure from Intel and other multinational corporations to provide millions of dollars in handouts when it implements a new tax on major enterprises as part of a global tax reform. The tax and subsidies that are scheduled to be implemented in the upcoming year are still being planned.