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Tuesday February 28, 3:54 PM

HO CHI MINH CITY, Vietnam (AFP) - US chip giant Intel is to build a 300-million-dollar semiconductor assembly and test plant in Vietnam, a move hailed as placing the communist country on the global high-tech map.

Intel Chairman Craig Barrett said the factory - which will assemble, test and ship microprocessors used in PCs and other electronic devices - would begin operations in the second half of 2007.

The investment in the country's southern commercial hub is believed to be the largest so far by a US company in Vietnam, America's former battlefield enemy, giving a boost to a dynamic economy that has grown by 7 to 8 per cent a year, officials say.

The 20,000 square metre plant would initially employ about 1,200 people, Barrett said, and construction would start almost immediately in the Saigon Hi-Tech Park outside Ho Chi Minh City.

Vietnamese government sources earlier said Intel planned to commit 605 million dollars to the project. Barrett said the two figures did not conflict as the investment announced Tuesday was only the first phase of Intel's commitment.

"Our announcement is an assembly and test factory, a 300 million dollar initial investment, 1,200 people initial employment: (it's) just one small initial step," Barrett said at the official ceremony to receive the investment licence.

The move by the world's largest chipmaker has been hailed as boosting Vietnam as a global investment destination, bringing jobs and technology know-how, and potentially enticing other hardware and software companies to follow suit.

Deputy Prime Minister Nguyen Tan Dung said Vietnam, which is negotiating membership of the World Trade Organisation, was speeding up economic reforms to implement a market economy and to further integrate into the world economy.

"We will do our utmost to create all the most favourable conditions possible so that projects like Intel will be successful," he said at the ceremony.

The plant will be the Santa Clara, California-based company's seventh such site worldwide. Intel already has similar facilities in China, Malaysia, the Philippines and Costa Rica.

Barrett said Intel plants usually attract other industry players, both suppliers and independent operations.

"This will probably lead not just to other investments by Intel but other investments in the high-tech electronic community here in Vietnam," he said.

"We are looking forward to continued investments beyond this," Barrett said, praising the "very forward looking" local and national governments.

"The reasons to invest here in Vietnam are evident to all of those who look around -- a very vibrant population, a very young population, an increasingly strengthened education system," he said.

Vietnam, with a highly literate population of more than 82 million, two-thirds of them aged under 30, is already Southeast Asia's fastest growing PC market.

Barrett said the plant's output would serve Intel's international markets. "Its product, or output, will serve the world marketplace, not just the Southeast Asian marketplace, not just the Vietnamese marketplace," he said.

Assembly and test sites separate chips that come as part of 'wafers' from fabrication plants, then package them into electronic devices, test and ship them, said Brian Krzanich, assembly and test manufacturing co-general manager.

Barrett also praised other areas of cooperation with Vietnam, including a programme that aims to train more than 30,000 Vietnamese teachers in coming years and "integrate technology into the classroom".

Intel is also helping the government set up wireless communications "to bring connectivity to the non-urban parts of Vietnam, the rural areas where there is not a heavily wired infrastructure," he said.

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