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Intel to invest up to $1 billion in Vietnam

By Tran Van Minh

Associated Press

HANOI, Vietnam — Intel Corp., the world’s largest chipmaker, has received permission to increase its initial investment in Vietnam from $300 million to up to $1 billion, a Vietnamese official said Tuesday.

Intel is constructing a $300 million chip assembly and testing plant in Ho Chi Minh City. Its original license, granted in February, allowed the company to invest up to $605 million.

The government has since approved an amended license allowing Intel to invest up to $1 billion and increase its production capacity, said Nguyen Anh Tuan, director of the Information Technology Industry at the Ministry of Telematics.

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The deal is considered a significant step forward in Vietnam’s campaign to attract foreign investors. It is already the largest single U.S. investment in the country since the Vietnam War ended in 1975.

Intel has scheduled an announcement for Friday in Ho Chi Minh City, but would not disclose its specific plans.

Tuesday’s development came on the same day that the World Trade Organization formally invited Vietnam to become the Geneva-based commerce body’s 150th member. It also comes just days before Vietnam hosts the Asia-Pacific Economic Cooperation summit, which will draw heads of state and business executives from around the globe.

Construction of the plant, which will employ 1,200 people, is expected to be finished in 2007. It will be Vietnam’s first semiconductor facility, and Intel’s sixth testing facility in Asia.

In 2005, computer and electronic equipment exports from Vietnam rose 34 percent to $1.44 billion, while imports of computers and electronics rose 26.3 percent to $1.7 billion.

Dean McCarron, an industry analyst at Mercury Research, said Santa Clara, Calif.-based Intel would likely spend the extra capital on upgrading the current facility, but could also earmark it for land acquisitions or infrastructure improvements in the surrounding area.

Few other semiconductor companies have the resources to invest as heavily as Intel in foreign markets, McCarron said.

"It shows that Intel has a pretty dedicated level of investment going on, even in the midst of their cost-cutting measures," McCarron said. "They’re still willing to invest in their future, and that’s something that’s pretty much a trademark of Intel."

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