Posted By: Eugene Taylor

Fri Nov 10, 12:10 PM ET

HO CHI MINH CITY (AFP) - US semiconductor giant Intel said it would invest a billion dollars in Vietnam and employ 4,000 people in what will be its largest assembly and test facility in the world.
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Seen as a vote of confidence in the fast-emerging economy, the announcement comes a week before US President George W. Bush arrives in Hanoi for an Asia-Pacific summit and as Vietnam prepares to join the World Trade Organization (WTO).

The world's largest chip-maker said in February it would build the plant in the Saigon Hi-Tech Park outside Ho Chi Minh City to assemble, test and ship microprocessors used in personal computers and other electronic devices.

On Friday it received official permission to scale up the plant from 150,000 to 500,000 square feet (14,000-46,000 square meters) and said construction would start next year, with plant operations to start by 2009.

"Intel decided to increase the size of the facility after an internal study determined that 500,000 square feet was the most efficient size for the assembly and test facility," the company said in a statement.

The project license was increased from 300 million to one billion dollars by the Vietnamese government.

"The new Vietnam facility will be Intel's first of this size and the largest single facility within the Intel assembly and test network," Intel said.

"We expect to gain greater efficiency, to improve our ability to meet our customers' requirements," said Brian Krzanich, vice-president and general manager of assembly and test facilities for Intel Corporation.

The investment will be the largest so far by a US company in Vietnam, America's former battlefield enemy, giving a boost to a dynamic emerging economy that has seen annual growth of seven to eight percent in recent years.

Prime Minister Nguyen Tan Dung hailed the move as "a positive act encouraging foreign direct investments in Vietnam to promote economic growth, especially in the field of information and communication technology."

The development will be a shot in the arm for Vietnam's hopes of shifting its economy from exports such as garments, rice and seafood toward the high-tech and information technology sectors.

"Vietnam used to be just an afterthought for big IT companies, coming after China and India," said Henry Nguyen, managing general partner of US investment fund IDG Venture Vietnam, which specializes in the IT sector.

"Now, with such a tremendous investment coming from a multinational giant, Vietnam is definitely on their map. Intel is leading the way for other big IT and non-IT companies' investments in the country."

The WTO on Tuesday approved Vietnam as its 150th member, a move the National Assembly is set to approve before the end of the month.

Vietnam on November 18-19 hosts an Asia-Pacific Economic Cooperation summit, due to bring Bush and other leaders from 21 member economies.

WTO accession has forced the communist country to scrap many restrictions on foreign companies doing business in Vietnam and is expected to lead to an influx of foreign investment in the nation of 84 million people.

Alain Cany, president of the European Chamber of Commerce in Vietnam, said the Southeast Asian nation was "becoming a player in the IT sector."

He added: "Some Taiwanese companies are also coming in. We can expect more companies to come to Vietnam."

The new plant will be the California-based company's seventh such site worldwide. Intel already has similar facilities in China, Malaysia, the Philippines and Costa Rica.

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