Intel has decided to put on hold its planned investment in Vietnam, a move that could have nearly doubled its existing operations in the country. Vietnam’s growing ambitions in the semiconductor industry, seeking to establish itself as an alternative to China and Taiwan, have received a blow as Intel reevaluates its expansion plans in the Southeast Asian nation.

Vietnam hosts Intel’s largest factory worldwide for assembling, packaging, and testing chips, and the country had anticipated further expansion, especially after US President Joe Biden announced support deals for Vietnam’s chip industry during a visit in September. However, shortly after Biden’s visit, US officials informed select American business leaders and experts that Intel had shelved its expansion plan, which was reportedly decided around July.

While the specific reasons behind Intel’s decision were not disclosed, concerns about power supply stability and excessive bureaucracy were raised as potential factors during meetings between the company and Vietnamese officials. Power shortages in Vietnam in June, which led to temporary production suspensions for many manufacturers, may have played a role in the decision.

Intel’s choice to expand investments in chip packaging in Malaysia, one of Vietnam’s main competitors in Southeast Asia, further emphasizes the impact of its decision on Vietnam’s chip ambitions.

Vietnam aims to establish itself as a key player in the global semiconductor industry by attracting chipmakers seeking to diversify their supply chains. The US embassy in Hanoi and the Vietnamese government have declined to comment on the situation, and Intel simply stated, “Vietnam will continue to be a critical part of our global manufacturing operations as demand for semiconductors grows.”

This development underscores the evolving dynamics in the semiconductor industry, where investments and expansion plans can be influenced by a range of factors, from power supply stability to regulatory environments.