The world's biggest chip shop

Economy of scale is one reason why IT gear is so affordable, something that’s readily apparent when you see the size of Intel’s prosaically named Assembly and Testing facility in Ho Chi Minh City, Vietnam.

The factory spans 47 hectares: this translates into the same number of rugby pitches laid out next to one another. Much of the space is offices, storage and logistics, but also a great many staff facilities including a breast feeding room and leisure areas.

Even the clean room areas where production takes place are huge at 46,450 square metres – or just over four and a half rugby pitches.  

CRN was allowed in for a look at the clean room where processor and other micro-circuit dies cut from semiconductor wafers, made at Intel’s other fabrication plants, are tested and assembled into the final chips that make up computers and other devices. 

The Vietnam plant is Intel’s latest, adding to five others in Arizona, Costa Rica, China and Malaysia, and represents the largest of the group.

At full capability, the Vietnam factory can churn out a billion chips a year, according to its finance director Jeff Prunty, and Intel has ear-marked a billion US dollars of investment for the project.

Vietnam is poor, with a GDP of $US118bn and inflation running at twenty per cent annually.

The country has been working to reform its economy, moving away from communist system and exporting primary products and labour, towards capitalism and hi-tech. Prunty says the government is very serious about modernising.

Intel is just one albeit important tenant at the giant 326ha Saigon Hi-Tech Park (SHTP), located about 15km from the centre of Ho Chi Minh City. Currently almost full, the SHTP is being expanded three-fold to fit even more hi-tech companies that are given preferential tax treatment, land leases and assistance with customs services.

In physical terms, beyond large amounts of space, roads and steady supplies of electricity and water, Intel also needs workers. Uyen Ho, corporate affairs director, says Intel has no problems attracting young Vietnamese to come and work at the plant, thanks to staff welfare policies and opportunities to transfer overseas for work and study.

The environment at the Intel plant seems very far removed from the alleged electronic sweatshops of China, where manufacturing behemoth Foxconn has long attracted controversy over reports of worker abuse.

An audit commissioned by Foxconn customer Apple last month found employees work excessive overtime, are underpaid and in some circumstances, not being compensated for physical harm at the company’s Zhengzhou Technology Park in China. 

Foxconn pays workers above minimum wage, but staff complained their salary was not enough to meet basic needs. Average reported salaries range between 2257RMB (A$344) to 2872RMB ($A438) at Foxconn, compared to the Shenzen minimum wage of 1,300RMB, about $A198.

Intel declined to provide details on salaries paid at its Vietnamese plant, saying only that they're "competitive". A search on job site forums indicate Intel engineers can earn 7.8 million dong a month, or $A380. 

Vietnamese average wage is around 3.2 million dong ($A155) per month.

Taking a dig at Chinese competitors, Prunty said, “We [Intel] make a billion dollars a year. We don’t need to be like Foxconn.” 

Workers at the plant are busy, but not manically so and have time to stop for a chat. The vast offices follow the Intel tradition of open-plan - nobody has an office, not even CEO Paul Otellini. This is cubicle country on a scale not normally seen in Australia.

The main problem plant management faces is finding people that speak English well enough to be able to communicate with their counterparts in the global Intel empire, where English is the lingua franca.

Intel is working with the government ministry of education to improve curricula for students and graduates, to ensure their English is as up to scratch as their technical qualifications. Some $US40 million is being spent in this area - $US7 million of that contributed by Intel.

Despite government support, progress for the factory has hit speed bumps. The 2008 global financial crisis and Intel’s subsequent profit plunging 90 per cent set production back a year as demand for processors vaporised and the billion dollar investment was scaled down. 

The factory was still officially opened in 2010 by Intel’s Otellini, but only operates at 10 per cent of total capacity. Of the originally budgeted billion dollars, Intel has only spent “a few hundred million” according to Prunty.

Pressure finding qualified workers at all levels is alleviated to some extent by the scaling back, with the plant currently only employing 1000 staff of the planned 5500. Intel is however is hoping to ramp up production at the plant fully in three to five years, making it the biggest chip plant in the world.