Intel confirms $300m Vietnam chip plant

Intel has accepted a licence from the Vietnamese government to build a plant in Ho Chi Minh City

Intel has finally confirmed plans to build a $300m semiconductor assembly plant and testing facility in Ho Chi Minh City in Vietnam. 

The chipmaker's chairman and former chief executive Craig Barrett unveiled the plans at a ceremony in Vietnam where he formally accepted the business licence from the Vietnamese government.

Construction will start immediately and the facility will employ about 1,200 workers. The investment is part of a $6bn planned expansion of Intel's chip making capacity for 2006.

Assembly plants package silicon to form the actual chip after it has been etched out in a fab using lithography equipment.

While all Intel's fabs are located in the US, Ireland and Israel, its assembly plants are found in low wage countries including China, Costa Rica and Malaysia.

Vietnamese officials disclosed last week that the nation had approved a licence allowing Intel to build a $300m plant. The chipmaker declined to comment at the time and would not confirm whether it planned to use the licence.

The investment is politically and historically significant because it represents the first investment by a semiconductor manufacturer since the US lifted its trade embargo against Vietnam in 1995.

It also demonstrates the progress that the nation has made in creating a high tech workforce, and officials said last week that they expect the Intel investment to work as a seal of approval that will attract other foreign investors.

"We applaud the progress the country has made in building up its technology infrastructure and the support of education programmes to advance the capabilities of the local workforce," Barrett said in a statement.

"Intel looks forward to working with the government and public sector in Vietnam to grow their technology capabilities and competitiveness."