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The Honolulu Advertiser
Posted on: Saturday, November 18, 2006

Intel's $1B investment makes Vietnam a player

By Margie Mason
Associated Press

Intel Site General Manager Rick Howarth, left, holds the license for the new facility along with Ong Phan Chanh Truc, chairman of high-tech park in Ho Chi Minh City, during launching ceremonies.

DAVID LONGSTREATH | Associated Press

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HO CHI MINH CITY, Vietnam Intel Corp. could have selected any country to build its largest chip assembly and testing plant. But the world's biggest semiconductor company decided to make the $1 billion investment in a relative newcomer to the high-tech game Vietnam.

Intel announced earlier this month it would more than triple its initial investment to expand the planned factory in southern Ho Chi Minh City from 150,000 square feet to 500,000 square feet. It is expected to begin operations in 2009 and could employ up to 4,000 workers.

Vietnam's first semiconductor facility represents the country's biggest single foreign investment. And Intel officials say the decision ultimately came down to Vietnam's people.

"The reasons we chose to invest here in Vietnam are evident," said Brian Krzanich, Intel's vice president and general manager for assembly and test, who announced the investment. "A very vibrant population, an increasingly strengthened education system, a strong workforce and a very forward-looking government."

Labor remains cheap in Vietnam, where education and self-improvement are rooted in the Confucian tradition and more than 60 percent of the population is younger than 30. Vietnam also has one of the world's fastest-growing economies and was recently invited to join the World Trade Organization.

The momentum continues to build as Hanoi hosts the Asia-Pacific Economic Cooperation summit, which will draw leaders from 21 Pacific Rim economies this weekend, including President Bush. Hundreds of corporate leaders from around the globe also will attend a CEO summit.

The latest Intel news, which follows an initial announcement in February to invest $300 million in the factory, comes as Vietnam is working hard to persuade foreign companies to put their trust in a country many still equate with war and poverty.

Vietnam is hoping Intel's investment will help build investor confidence and put the country on the path of other high-tech powerhouses like India. Construction is expected to begin in March on the company's sixth testing facility in Asia.

To sweeten the deal, Vietnam offered attractive incentives. Santa Clara, Calif.-based Intel will not pay corporate taxes for the first four years of operation and will enjoy a 50 percent tax break the following nine years, said Pham Chanh Truc, head of the high-tech park in Ho Chi Minh City. After that, Intel will pay only 10 percent in taxes, compared with the normal 28 percent corporate rate. The incentives are offered to all businesses that invest in the site, Truc said.

Intel officials declined to discuss details of the deal.

Company spokesman Chuck Mulloy said the assembly and testing facility which performs some of the final tasks, including cutting the processed silicon wafers into chips and subjecting them to a battery of tests before being shipped to customers will serve as a model for future Intel plants around the world.

Besides Vietnam, the company also has assembly and testing plants in China, Malaysia, the Philippines and Costa Rica.