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Intel Cancels Chip Operation Expansion in Vietnam, Impacting China Alternative Plans

Updated: Jan 8

[Edited] Intel, the US chipmaker, has decided to shelve its planned investment in Vietnam, dealing a blow to the country's aspirations to position itself as an alternative to China in the semiconductor industry.

Credit: Bloomberg

Vietnam, home to Intel's largest factory for chip assembly, packaging and testing, had hoped for further expansion from the company after US President Joe Biden announced support for Vietnam's chip industry during his visit in September.

However, US officials informed a select group of businessmen that Intel had abandoned its expansion plan, citing concerns about power supply stability and excessive bureaucracy in Vietnam.

The decision by Intel is a setback for Vietnam's ambitions to play a larger role in the global semiconductor market and attract chip makers looking to diversify their supply chains. The country has been in talks with various chip companies, but Intel's withdrawal raises doubts about future investments. Vietnam experienced power shortages in June, leading to temporary production suspensions for many manufacturers. Meanwhile, Intel is expanding its chip packaging investment in Malaysia, a competitor to Vietnam in Southeast Asia.

During Biden's visit, the White House announced new initiatives and investments by US chip companies, but Intel was not mentioned. The company's about-turn comes after it announced significant investments in Europe earlier this year. While Intel did not provide a specific reason for canceling the expansion, it emphasised that Vietnam will remain a critical part of its global manufacturing operations as semiconductor demand continues to grow.

Intel's decision highlights the challenges Vietnam faces in attracting and retaining foreign investments in the semiconductor industry.

The Vietnamese government had previously mentioned plans to attract an additional US$3.3 billion investment from Intel, but later removed the reference from its official portal. The government is also under pressure from multinational companies, including Intel, to provide subsidies to offset the impact of a new levy on large companies as part of a global tax overhaul.

  • Intel has canceled its planned investment in Vietnam, impacting the country's ambitions to become a China alternative in the semiconductor industry.

  • Concerns about power supply stability and excessive bureaucracy were cited as reasons for Intel's decision.

  • Vietnam had hoped for further expansion from Intel after President Biden's announcement of support for the country's chip industry.

Source: SCMP

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