Intel did not call off expansion in Vietnam due to power shortage: association chairman

The argument that Intel had called off its $1 billion investment plan to expand chip production in Vietnam due to lack of electricity and cumbersome administrative procedures is unfounded, said Prof. Nguyen Mai, chairman of Vietnam’s Association of Foreign Invested Enterprises (VAFIE).

The official made the comment after a Reuters article on November 7 reported that the tech giant had shelved its planned investment expansion in Vietnam due to "concerns about the stability of power supplies and excessive bureaucracy".

Vietnam always prioritizes electricity for industrial parks

According to Mai, former Vice Chairman of State Committee for Cooperation and Investment, now Ministry of Planning and Investment, it is true that Vietnam suffered a power shortage last summer. However, that is not the reason why Intel withdrew its project.

"Vietnam's industrial parks (IP) currently boast very good infrastructure, especially high-tech parks such as Ho Chi Minh City High-Tech Park, where Intel’s factory is based. In addition, Vietnam always prioritizes electricity for IPs so that large enterprises can feel secure in production. Factories located in industrial zones never lack electricity. Therefore, this statement is not correct," the professor said.

As for cumbersome administrative procedures, he said some officials, civil servants, and public employees still caused difficulties for businesses.

Since Intel began its plan to build a factory in Vietnam in 2006, it has enjoyed a number of unprecedented "privileges". Therefore, Intel itself and many other large FDI enterprises have appreciated the investment environment in Vietnam. Recently, Vietnam has also promoted administrative procedure reform and streamlined the state apparatus, according to Mai.

"Vietnam is making great efforts to improve its business and investment environment. These reforms are highly valued by many large corporations, including Intel. Thus, the argument that administrative procedures are cumbersome is also not true," the VAFIE chairman commented.

Explaining Intel's alleged decision to cancel the $1 billion investment plan to expand its chip factory in Vietnam, Mai said that this may just be a business strategy.

"Intel is facing difficulties from fierce competition from rival companies such as Nvidia and AMD. Its CEO Pat Gelsinger is standing in front of a career-changing bet. Once a dominant corporation in the chip industry, now, the American tech giant has to act quickly to avoid being left behind by its competitors. Therefore, Intel definitely has its own business strategy. Where and when to invest are decided by it," he noted.

According to the professor, semiconductor chip giants such as Intel, Samsung and Foxconn have been smart enough to choose to invest in Vietnam because the country possesses very important resources, including 22 million tons of rare earths and significant Tungsten reserves.

"Vietnam has many advantages, notably large reserves of rare earths, which are important raw materials used in semiconductor and battery production. This is also one of the reasons why big names in this industry come to Vietnam," Mai said.

In addition, Vietnam’s signing and implementation of 16 free trade agreements (FTAs), and the upgrade of Vietnam-US relationship to a comprehensive strategic partnership have been appreciated by foreign investors.

"Intel's representative in Vietnam also affirmed that his firm highly rates Vietnam’s investment environment, especially its political-social stability, the talented and young workforce, and its prime location in Asia. These are conditions for Intel to continue investing in Vietnam. Therefore, I affirm that the arguments about cumbersome procedures and power shortage are unfounded," the VAFIE chairman reiterated.

Right after the Reuters report, Intel Products Vietnam general director Kim Huat Ooi stated that Intel will continue to invest in Vietnam per its pledged commitment and continue stable operations.

Intel invested $1.5 billion in Vietnam between 2006 and January 2021, the executive noted. The Intel Vietnam factory accounts for 50% of packaging and testing tasks for Intel globally and currently participates in the production of the latest generation of Raptor Lake processors and the next generation of Meteor Lake processors, he added.

Intel is committed as a long-term and trustworthy partner and continues to accompany Vietnam in developing the semiconductor sector, Kim Huat Ooi emphasized.