Vingroup, Vietnam’s largest conglomerate, has reached an agreement with Intel to develop 5G technology for a number of industries in the rapidly developing Southeast Asian country, particularly in the hot field of electric vehicle manufacturing.
The Vietnamese conglomerate, led by billionaire Pham Nhat Vuong, said in a statement last week that it signed a memorandum of understanding with the US semiconductor giant to create a wide range of advanced computer systems. Intel, which has a $ 1.5 billion state-of-the-art chip manufacturing and assembly testing facility in Vietnam, is likely to design the technology for Vingroup, analysts say.
The companies will collaborate largely to install Internet-of-Things technology in factories such as those that produce electric vehicles and electric vehicle batteries for Vingroup’s automotive arm, VinFast, the statement said. VinFast, launched in 2016, is expanding at home and abroad to capture a share of the lucrative but competitive electric vehicle market. In March, VinFast signed a Memorandum of Understanding with the North Carolina state government to start its first US-based electric vehicle and battery factory.
The automotive industry has particularly taken Intel’s thinking into consideration. “The digitization of everything is contributing to the insatiable need for semiconductors, particularly in the automotive sector,” Intel CEO Pat Gelsinger said in the statement.
Intel could potentially support wireless communications between battery modules in electric vehicles, as other automotive technology companies have done, says Sam Abuelsamid, principal analyst at market research firm Guidehouse Insights. For example, UMC, Taiwan’s second largest contract chip maker after TSMC, announced in April that it is building a power chip manufacturing facility with Toyota-backed auto parts supplier Denso to produce semiconductors in Japan. .
“Intel wanted to return to supplying processors as vehicles move into centralized processing,” Abuelsamid says. On VinFast’s part, he says, “the electric vehicle market is very competitive and the question is whether VinFast is able to produce a vehicle with a certain level of quality that consumers expect today, at a [fair] price.” Last year, Vingroup began discussions with Foxconn, the world’s largest consumer electronics contract assembler, about collaboration in electric vehicles.
Also in the automotive realm, the pair would work on artificial intelligence systems for the driver’s interface and perhaps build applications inside the vehicle, the Vingroup statement said.
Intel’s 5G technology would further support the development of the Vietnamese conglomerate’s Vinhomes Smart City, a high-end residential project in Hanoi with security and other AI-based features.
Intel will become a “service provider” in its deal with Vingroup, predicts Adam McCarty, chief economist at Mekong Economics in Hanoi. Vingroup would have relationships with big names, he says, and its partnership with Intel should specifically bring safer roads to Vietnam through the smart city component of their partnership.
“The match would be that Vingroup doesn’t have the technology, but for the design phase, whether it’s cars, motorcycles or apartments, they have a lot of distribution,” says Ho Chi Minh City-based senior consultant Frederick Burke, the global law firm. Baker McKenzie. Vietnamese consumers know the Intel brand, another push for Vingroup, Burke adds.
The conglomerate already does a ubiquitous share of business in Vietnam’s major economic sectors, including real estate, retail, and healthcare.
Vietnam’s GDP will grow by 6.8% this year, from 2.6% in 2021 and from 2.9% in 2020 as the Covid-19 epidemic fades, according to a report by Fitch Solutions in March. Vietnam had gone into rapid growth before the export production pandemic.