Travelling On The Silicon Road

An emerging “China plus one” strategy for companies looking to diversify from China is a good sign for Vietnam which had seen some roadblocks on its path to a hi-tech industry satellite (if not hub) last year when Intel as well as homegrown V-Caps had stalled their operations there. Countries like Vietnam hope to peel away a significant amount of tech business to become global subsidiaries of the world’s factory floor.

The industry bellwethers’ decision in 2006 to build an assembly & testing plant in a country without a single world-class university and instead of in countries like India and China jolted the global tech world.

Intel has always gone for geographical locations where the local government offers them major tax incentives and subsidies. Labour and other infrastructure costs, while important, do not weigh as heavily in the company’s plant location choice. In this respect, Vietnam gave Intel a virtual hot line to top government officials. Rick Howarth, Intel’s general manager of the 115-acre site in the new Saigon Hi-Tech Park, has reportedly an open invitation to visit the country’s top leaders any time.

However, this new investment in Vietnam does in no way signify the company’s move away from China. No one can ignore the huge customer base there. In fact, besides its existing big presence in China, Intel’s CEO, Otellini, attended the opening of Intel’s first microprocessor manufacturing facility in Dalian, China earlier in the week.

Becoming global subsidiaries of the world’s factory floor…