Intel unveils major expansion plans

While Intel plans to expand production, they have complained that input materials need to be readily available _Photo: Le Toan

Sherry Bogger, general manager of Intel Products Vietnam, said in a meeting with local suppliers at Saigon Hi-tech Park (SHTP) last week that local suppliers had played an important role in the operation of global businesses like Intel.

 “Last year Intel Vietnam contracted four new suppliers, increasing domestic value to $11 million, which we plan to double this year,” said Bogger.

 “Intel’s factory could shut down and would incur major losses if we are not able to source materials within 24 hours,” she added.

Last month, Intel’s two domestic suppliers in Ho Chi Minh City and the neighbouring Binh Duong province reportedly had their operations interrupted due to damage caused by protests against China’s illegal placement of an oil rig in Vietnam’s continental shelf and exclusive economic zone, and the company had to hurriedly import a consignment of supplies from Malaysia to ensure stable production.

Although Intel currently has 94 domestic suppliers, including 20 direct suppliers, they are only providing the company with components  such as packing items, machine tools, chemicals, and basic materials needed to operate Intel factory and for use in maintenance and services.

According to Intel Products Vietnam, local suppliers would take on a higher priority in its new development strategy, but “this is not only a challenge but also an opportunity for domestic suppliers.”

 “The success of Intel’s domestic suppliers in its host countries can lead to their regional or global success, commensurate with Intel’s global expansion,” Bogger asserted.

Accordingly, domestic suppliers need to improve production-business management processes to ensure they satisfy Intel criteria in terms of product delivery, quality and competitiveness and should have long-term development plans.

As reported by Intel Vietnam, this year the company will focus on sourcing local products such as production materials for clean rooms, as well as polymer materials such as suction cups, nozzles and packing materials.

In a recent letter to local authorities, Intel Products Vietnam said Intel had decided to close its assembling plant in Costa Rica and plans to relocate it to Asia, and possibly Vietnam. The closing date is slated for later this year. Intel Products Vietnam is the company’s fifth assembly and test manufacturing facility throughout the world. It started operations in 2010.

Le Hoai Quoc, head of the SHTP Management Authority, noted that meetings between businesses based in the park and local suppliers brought about positive results as they gave local suppliers a chance to take part in the global supply chain of the park’s firms. Many of them are global players, including Intel, Samsung and Datalogic.

SHTP’s goal is for firms it hosts to reach a 25 per cent localisation rate by 2014, and 40 per cent by 2020.