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|Vietnam’s southern metropolis Ho Chi Minh City is well one the way of becoming the nation’s hub for many tech-savvy corporations (Photo: Duc Thanh)|
At last week’s Ho Chi Minh City – US Business Summit, Kim Huat Ooi, vice president and general manager of Intel Products Vietnam reminisced with pride that the company was the first high-tech corporations with an investment capital over $1 billion in the country – a big success preceding Intel’s larger vision in the future.
Intel Products Vietnam has an exemplary story in Ho Chi Minh City. Intel first announced a $300 million investment for an assembly and test plant in the Saigon High-Tech Park (SHTP) in 2006. The company’s total registered investment was raised to $1 billion nearly a year later. As of present, the SHTP factory has become Intel’s largest chip assembly and test plant in the world, employing over 5,000 people.
Ooi noted that Intel has been looking at many countries around the world for possible expansion and has chosen Ho Chi Minh City for several reasons. This decision has been reconfirmed by the country’s quick action and strong policies to contain the coronavirus. Therefore, Intel could maintain normal operations with its output even increasing by 30 per cent in the first half of 2020, contributing three-fourths of its total global output.
The general manager also stressed that this is an unimaginable figure. “Intel could have not achieved this without the support of Vietnam. Ho Chi Minh City is an innovative and open-minded city to welcome new technologies and solutions. Besides amazing incentives, the city is home to many talented and passionate people who are working for Intel. Also, the SHTP is providing all services that the company needs. The park has transformed itself from a vacant land into a place full of on-site amenities for foreign companies like us,” Ooi said.
In March alone, Intel’s factory in the SHTP produced two billion units of semiconductor and processing chips used in computers and other devices, meaning the factory produces 25 chips every second. Moreover, the company is working with relevant stakeholders to further reduce production time and improve the productivity of the factory.
“Intel is mulling to increase investment into its chip factory in Ho Chi Minh City in the coming years. Intel’s export revenue in Vietnam has reached $3.6 billion. The additional capital is expected to increase the export figure significantly, and we will also use it to develop local middle and senior leaders for our factory here,” Ooi said.
Another investor, who is also performing well in Ho Chi Minh City, is the US solar manufacturer First Solar. The company has invested $1 billion to develop a factory in Cu Chi district in 2017. Covering a total area of 44 hectares, the factory was put into operation in 2018.
Kheng Joo Ung, managing director of First Solar Vietnam, said, “The company’s investment was so far extremely successful thanks to the skilled workforce and favourable business climate. The Cu Chi factory has become the world’s largest one producing advanced thin solar modules. In addition, the factory also achieves the highest performance in First Solar’s system worldwide, exporting 12,600 outbound containers per year while operating with an annual capacity of 2.6GW.
He further noted that First Solar is committed to further developing the tech supply chain in Vietnam and increasing the localisation rate. The company has increased the percentage of local vendors from 30 to 63 per cent between 2017 and 2020. The change has helped First Solar to diversify its supplies and materials for production while reducing risks, especially now that foreign suppliers cannot enter the country during the pandemic. By working with local vendors, First Solar can also improve predictability, ensure stable raw material supply, and achieve a better price structure.
Besides manufacturers, other US investors also inject funds into local tech firms to tap into the domestic market. Venture capitalist Vinod Khosla, founder of Khosla Ventures, is among those looking to capitalise on the Vietnamese market. Most recently, the billionaire has invested in 3D printing technology company Arevo. Arevo, the company behind the 3D-printed Superstrata Bike, raised $25 million in a Series B financing round, led by Defy Partners and GGV Capital with participation from Khosla Ventures, Alabaster, and others.
“I highly appreciate Vietnam’s prime location and talent pool. Also, with my extensive experience in Silicon Valley, I can see the country emerging as the perfect destination for AI and software development,” Khosla said at an online summit.
Meanwhile, e-wallet company MoMo bagged $100 million in its Series C funding round from US-based private equity firm Warburg Pincus in 2019. Nguyen Ba Diep, CEO of MoMo, said that the company has reaped several benefits from the investment of Warburg Pincus. In addition, having fresh funds to develop its e-wallet service, it gives the company the chance to meet with unicorns worldwide and learn about new technologies and products. As a result, MoMo has seen its value increase by 50 times, reaching $5 billion since its inception in 2014.
“When working with Warburg Pincus and other US funds, we can elevate our position from a local company to an international firm. By following international standards, we have opportunities to work with big tech players as well as multinational companies in the field of payment,” Diep said.
According to Marco Breu, general director of McKinsey Vietnam, Ho Chi Minh City has developed a tech supply chain to accommodate more foreign businesses. However, the city will need to focus on attracting high-tech occupations and AI businesses to be ready for the future.
“I appreciate the one-stop-shop services that bring many advantages for international investors in Ho Chi Minh City. However, there are still some things that need to be improved, such as easing the entrance restrictions for them,” Breu said. “The low production cost is not enough to increase the efficiency of business operations in Vietnam. It is more important to build efficient and sustainable production chains as well as qualified suppliers.”
Speaking at the Ho Chi Minh City – US Business Summit, Nguyen Thien Nhan, Secretary of Ho Chi Minh City Party Committee stated that the city has many opportunities for US investors. It is the largest economic hub in Vietnam with more than 10 million people, contributing nearly 25 per cent of GDP and nearly 30 per cent of the budget revenue for Vietnam.
Ho Chi Minh City has a solid basis to attract high-tech and AI businesses. Currently, the city has the largest and most successful software centre in Vietnam. With 10,000 employees, Quang Trung Software Park is currently the production base for large enterprises. In 2019, the park exported $500 million of software. In addition, the SHTP currently has more than 160 enterprises with production facilities worth more than $7 billion and workplaces for around 46,000 people. Among them are large enterprises such as Intel and Samsung.
Nhan also argued that Ho Chi Minh City acts as a bridge in the relationship between Vietnam and the US, and that the city will accompany, listen, and work with foreign businesses so that they are truly satisfied with the city’s policies and business environment.