Intel to invest 605 mln usd in Vietnam chip plant
HANOI - The world's largest chipmaker Intel has asked the Vietnamese government for a license to build a chip plant worth 605 mln usd in southern Ho Chi Minh City, a government official said.
'Intel applied for licensing with the Ministry of Planning and Investment on Wednesday,' a ministry official said, according to Agence France-Presse.
'We expect that all the administrative procedures will end soon as this is a huge project for Vietnam's information and technology sector.'
Under Vietnamese regulations, the project needs authorisation from several ministries before being submitted to the prime minister for final approval.
Intel officials declined any immediate comment.
According to the daily Tuoi Tre newspaper, the plant will cover 46.7 hectares and employ 2,000 local workers.
In late 2003, Intel signed an agreement with FPT, a semi-private Vietnamese IT company, to be its first original equipment manufacturer (OEM) in Vietnam.
Under the agreement, Intel sells central processing units, main boards and other components to FPT at preferential prices for the manufacture of desktops, laptops and servers under the Vietnamese company's Elead brand.
'I believe the main reason (for the investment) is cost-saving,' an FPT official said. 'In Asia-Pacific, the costs of production and distribution are much lower'.
He said Intel probably also wanted to diversify production locations, with 'IT giants turning to Vietnam to reduce their risk.'
Last June, Intel president Paul Otellini said his company was already enjoying growing sales in the communist nation, the fastest growing PC market among the 10 members of the Association of South-East Asian Nations.
Otellini had come to Vietnam to sign an agreement with the government to improve accessibility of information technologies throughout the country.
The US chip giant created a foundation aiming to boost communication infrastructure across ministries, government, provinces and various organisations and to help Vietnam develop a robust local IT industry.
The latest investment seems to be the next stage of the company's strategy.
'Vietnam is a very promising market because entreprises are under-equipped,' a foreign expert said. 'The potential is very big, including in the government and state-owned companies'.
He said the Intel plant would undoubtedly boost the sector by creating jobs and help Vietnam's exports.
'It is a very big sign. Intel is not coming just for the Vietnamese market. They are looking at other markets around.'
Last month Intel said it would invest 230 mln usd in Malaysia as part of a three-year expansion plan. It also said it was planning to invest more than one bln usd to expand in India in the next five years.
AFX News Limited - January 5, 2006.
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