Intel had to spend a considerable amount of $6.1 million (140 billion dong) in a month to comply with Vietnamese anti-COVID measures in its factories in Ho Chi Minh City to avoid disruptions in production. These costs include bills for hotel rooms, daily virus tests, and other sleeping accommodation for employees and workers of suppliers working with the chipmaker in the South East Asian country.
Minh City is the worst hit by the COVID-19 pandemic accounting for over half of the country’s total 308K cases (since April) and 7,150 deaths as of August. Like most developing countries, its vaccination drive has been inadequate with less than 2% of the overall population reported to be fully vaccinated by the 18th of August.
As such, government authorities in Ho Chi Minh City have implemented strict regulations to contain the spread of the virus. Multinational companies like Intel are to house their employees within (or close to) the foundry campus and test all their workers daily. As a result, the operating costs have gone up significantly, resulting in lower production budgets for industries varying from smartphones to sneakers and microprocessors.
Intel officials have stated that these measures will affect the chipmaker’s budget plans and adversely impact production if it continues for too long. The chipmaker runs a test and assembly plan in the Saigon Hi-Tech Park, responsible for manufacturing a wide range of Core processors and 5G equipment. Earlier this year, Intel injected $475 million into its Vietnam division, its largest chip assembly and testing site globally. The company has requested the government to allow employees who test negative for the virus and live in areas of the city considered safe zones to commute to work from home in transportation provided by the company. The second vaccine dose for all employees is also requested.
Intel had to pay the hotel bills for 1,870 workers in four and five-star hotels, plus bonuses, and less expensive hotels for 1,500 employees of its suppliers. The company has invested $1 billion in its Vietnam Division since 2006, plus an additional $475 million over the past 17 months. During the pandemic, this worked in Intel’s favor as neighboring economies (China, Taiwan) shut down but Vietnam remained mostly open, allowing Intel to increase production volume by 30% in H1 2020 YoY.
By the end of 2020, Intel Vietnam has shipped more than 2 billion units to customers worldwide. The plants in Vietnam fabbed Intel’s 10th Gen (likely 11th Gen as well) processors and the Lakefield SoCs with Foveros technology.
Source: Bloomberg
