Intel: Strategic Decisions in Locating a New Assembly and Test Plant (B)

1038 Words Jul 6th, 2014 5 Pages
9-713-419 REV: DECEMBER 2, 2013
Intel: Strategic Decisions in Locating a New Assembly and Test Plant (B)
In February 2006, Intel announced it had selected the Saigon Hi-Tech Park (SHTP) in Ho Chi Minh City as the site for its next assembly test (AT) plant. Recalled Brian Krzanich, Intel general manager Assembly Test: “From the first day we got there, it was ‘What can we do for you?’ They really wanted us, and we saw that in the park’s general manager we had someone who could get things done.” In February 2006, Vietnam’s Minister of Investment and Planning issued an investment license for Intel to build a $300 million AT facility; Intel later upped this investment to $1 billion.1
The Short List Runners-Up
Before settling on Vietnam,
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This account also covered solar panels for the plant’s roof, funded the electric substation, and covered some training and development. In exchange, Krzanich noted, “What they asked for was big ceremonies at our announcements, and building kick-offs, and publicity and pictures.” The operational manager of the technology park was an influencing factor. A government official and member of the Communist party, he had the ability to negotiate directly with Intel for many aspects of the park’s build out and the plant’s infrastructure needs, eliminating potential red tape. Krzanich said, “This guy had the authority to make any and all decisions. He could go directly to the party and get permission. If we wanted the creek moved, he could get it moved.”
Other risks remained: the business and manufacturing environment was fairly immature, according to Krzanich, “There was no one else there and so there was not a lot in the way of infrastructure. They were just starting to put that in place.” Customs capabilities at the airport presented a problem however; electronic data interchange, which facilitated the movement of the daily shipment of Intel’s product through customs, was undeveloped in Vietnam. One team member recalled, “We could enter customs data on our end, but they didn’t have a way to receive it.” Additional investments were made to bring customs systems up to par. Local talent was also a concern given the scarcity…