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Technology

Intel increases Vietnam chip investment by nearly 50%

US semiconductor giant faces pressure to outsource amid tech delays

Intel's $475 million expansion of its Vietnam unit will help it adopt more advanced technology and move beyond its key central processing unit business, the U.S. chipmaker says.   © AP

HO CHI MINH CITY -- U.S. chipmaker Intel injected $475 million into its Vietnam division, its biggest chip assembly and testing site globally, even as the company looks set to outsource more production and risks being eclipsed by the more advanced technology of rivals.

Intel Products Vietnam used the funds, a nearly 50% increase from previous investments, to manufacture 5G products and core processors, the company said Wednesday. The expansion was to help it "take on more complex technologies" and diversify beyond the central processing units at the heart of its business, Intel said.

Separately the U.S. semiconductor giant has said it is likely to tap third parties to manufacture more products in the next few years. Nikkei Asia reported that these partners include Taiwan Semiconductor Manufacturing Co., which has developed 5-nanometer chips, the industry's most advanced. TSMC has been in talks with Intel on at least five projects for possible outsourcing, Nikkei has learned.

Intel has long kept most production in-house but has struggled to maintain its technological edge, including with the delay of its 7-nanometer chips.

Vietnam has become an increasingly important part of the tech supply chain, with companies from Samsung Electronics to Apple supplier Pegatron relocating from China in recent years amid rising costs and trade and geopolitical risks.

Intel has poured $1 billion into the Southeast Asian country since 2006 and made the additional $475 million investment over the past 17 months.

That became an advantage during the COVID-19 pandemic, when neighboring economies shut down but Vietnam remained mostly open, allowing Intel to increase production volume by 30% in the first half of 2020 versus the year-earlier period.

"As of the end of 2020, Intel Products Vietnam has shipped more than 2 billion units to customers worldwide," said general manager Kim Huat Ooi. "We're very proud of this milestone, which shows both how important IPV is to helping Intel meet the needs of its customers all around the world, and why we continue to invest in our facilities and team here in Vietnam."

The plants in Vietnam make Intel's 10th-generation core processors and another made with 3D stacking technology. Intel bills itself as the largest U.S. high-tech investor in the communist country, though local workers mainly do assembly and testing.

For more advanced design and manufacturing it may turn to Taiwan's TSMC, which already makes Intel graphics processors and modems. The latest negotiations center on products including laptops, servers, and edge-computing devices. Intel is also in talks to outsource some production to Samsung Electronics.

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