Global computer chip manufacturer, Intel, has announced that it will be moving more of its mature products to Vietnam due to the Southeast Asian country’s lower labor costs. In this case, the company will be shutting down part of its current operations in Malaysia and moving those jobs to Ho Chi Minh City (HCMC) in Vietnam. China will also receive part of the manufacturing work.
In another strategic move, Intel has partnered with FPT, a Vietnamese conglomerate. Cooperation between the two companies will include implementing a product display and experience area in FPT shops. Intel will also provide training to employees in the shops and participate in marketing activities.
Intel in Vietnam
Intel was one of the first high tech companies to build a factory in Vietnam. In 2006, the company opened its factory in HCMC with a total registered capital of US$300 million. After a year, Intel increased its investment in Vietnam to US$1 billion.
In 2010, the HCMC factory began assembling and testing semiconductor components. In late 2013, it launched Atom SoC (system on a Chip). In July 2014, Intel announced that it had produced thefirst made-in-Vietnam CPU. By the end of this year, Intel expects to manufacture 80 percent of their CPUs for the world market in Vietnam. The new CPU is part of the fourth generation of Intel CPUs, which are used, for desktops, laptops and mobile phones.
Asia’s next tech hub: Vietnam?
Although Vietnam is more well known for its textile-manufacturing prowess, the country is quickly becoming the go-to location for technology manufacturers. High tech companies are starting to flow into the country as they seek to take advantage of the low-cost, young, fast learning, and rapidly expanding workforce. The country is also providing a range of financial incentives to businesses engaged in high-tech activities, such as large reductions in corporate income tax.
In particular, many high tech companies are looking to escape worsening business conditions in places like China. These companies have begun moving their operations from the Asian giant due to such issues as rising wages and geopolitical tensions. Additionally, there is the perceived feeling that the country’s government is favoring local tech companies too much through its policies.
Vietnam has attracted substantial investments from multinational giants such asSamsungand Mitsubishi, and analysts predict that once Thailand moves up the value chain, Vietnam will take its place.
Vietnam is also quickly becoming a prime market for foreign investment in e-commerce activities. The country’s rapidly growing economy and middle class are, in turn, spawning a strong consumer culture and increasing levels of disposable income. Electronic retail is fast becoming the preferred method of shopping—particularly among the country’s youth.
According to Vietnam’s E-commerce and Information Technology Agency (VECITA), in 2015 B2C e-commerce sales in the country will amount to more than US$4 billion.
With all of the country’s attractive factors, it is easy to understand why companies like Intel and Samsung are ramping up their investments in Vietnam. If these levels of investment continue, and the country is able to move up the value chain, Vietnam is well on its way to becoming the Silicon Valley of Southeast Asia.
Source: Vietnam-briefing
Key words: Tech in Vietnam, Intel, Increases, Investment
