Intel puts brakes on chip operation expansion in Vietnam

Intel has opted to cancel its planned chip production expansion in Vietnam, which would have roughly doubled the company’s presence in the country. The decision was taken in July and relayed to a small group of American businesses and experts shortly after President Biden’s visit to Vietnam. Intel did not give a reason for canceling the project, worth about $1 billion. However, Intel had previously expressed concerns about power supply stability and red tape in Vietnam. Regardless, Intel declared that ‘Vietnam will continue to be a critical part of our global manufacturing operations as demand for semiconductors grows.’

Why does it matter?

The decision by Intel is a setback for Vietnam’s ambitions to establish itself as a global technology sector alternative to China and Taiwan, particularly in light of political risks and trade tensions between the two world’s largest economies. Intel’s halting of its development in Vietnam is part of a wider trend of strategic restructuring. Under CEO Pat Gelsinger, Intel has devoted billions of dollars to developing plants on three continents to reclaim its chip manufacturing dominance and compete with rivals AMD, Nvidia, and Samsung in advanced semiconductors.

Despite the shelving of the Vietnam project, Intel continues to invest in Europe as part of a strategy to reduce reliance on US and Asian chip markets while also benefiting from European Commission funding rules.