After Intel INTC -0.41% announced its intention to build a massive chip factory in Vietnam that would employ 4,000 people, it soon realized that it faced a daunting challenge.
In a test of basic engineering skills that it administered to 2,000 graduating Vietnamese students, only 90 passed and only 40 were proficient enough in English to be hired, according to a piece in Bloomberg that referenced a report in the Tuoi Tre newspaper in April 2008. The education system in Vietnam was not preparing its students for basic engineering jobs, which would make it challenging for Intel to hire the human talent it needed to be successful and for Vietnam to bolster its economy and improve the lives of its citizenry. According to the Bloomberg article, “An Intel representative said at the time it was the worst result it had encountered in any country it invested in, the newspaper said.”
In response, Intel has made a big commitment to not only improve the talent base in the short term for its own success, but also to help Vietnam improve its overall education system.
Given Intel’s commitment to Vietnam, this has been a smart and necessary step. At the outset of most new sectors, a well-functioning ecosystem with predictable interfaces between adjacent steps in the value chain is often absent. For example, in the early days of the mainframe computer industry, IBM IBM +0.38% could not have existed as an independent manufacturer of mainframe computers because manufacturing was unpredictably interdependent with the design process for the machines, as well as the operating systems, core memory, and logic circuitry. Indeed, independent suppliers of those parts did not exist, so to manufacture mainframes successfully, IBM had to integrate forward and backward through all the parts of the value chain that were not yet well understood and established.
Given that the core capabilities in Vietnam’s education system do not today exist to allow Intel to operate the manufacturing plant, it needs to integrate backward to create that capacity.
And indeed it is. On my last morning in Ho Chi Minh City I sat down with Sherry Boger, the general manager of Intel Products Vietnam. Boger detailed Vietnam’s multi-faceted effort to improve the education system in Vietnam.
In addition to a variety of initiatives, including its own backward integration by offering internal training through Intel University, the company has made three strategic moves.
First, the company launched an initiative to provide $7 million in scholarships for engineering students to attend college in the United States for two years after three years in university in Vietnam so that they could receive a sounder, more rigorous engineering education. In an effort to combat the lack of women in engineering and vocational programs in Vietnam—roughly 3 percent of graduates from these programs are women—the last of three cohorts that will finish in June is comprised of 16 women and five men.
Second, Intel helped seed the Royal Melbourne Institute of Technology’s (RMIT) master’s in engineering program in Vietnam by providing $2 million in scholarships. Previously RMIT had only offered a bachelor’s degree in Vietnam and was hesitant to launch a master’s degree program without knowing if students would attend.
And finally, Intel is part of a $40 million initiative called the Higher Engineering Education Alliance Program (HEEAP) with several partners, including Arizona State University, one of the more innovative U.S. universities, the Vietnamese Ministry of Education and Training, and USAID. The initiative is working with three vocational colleges and five universities and has five primary components that Boger described.
First, modernize the curriculum and educational methods in Vietnam’s engineering programs. The initiative funds professors to go to the United States to help them redo the engineering curriculum in Vietnam to be ABET accredited, the prime accrediting association for engineering programs worldwide, as well as improve instructional methods to be more interactive and discussion based with an emphasis on application. The initiative is also introducing online learning courses through Arizona State University’s learning management system partnership with Pearson. Given that certain expertise does not exist among the faculty members at the local colleges and universities—for example, there are no programs in industrial engineering offered in the country—this is critical.
Second, modernize the labs so that Vietnamese students can learn to apply what they have been taught.
Third, create the capacity in the programs for the courses to be taught in English to build that capability for the students and eliminate the need to translate manuals into Vietnamese.
Fourth, train the deans and rectors of the colleges and universities to help them be more strategic and forward looking.
And fifth, promote diversity in the programs to combat the fact that women are actively discouraged from engineering and vocational studies in Vietnam.
My sense leaving the breakfast was that Intel is all in to support Vietnam—for its self-interest as well as Vietnam’s. I suspect more initiatives will be announced in the future with exciting implications for Vietnam.