The IT giant's move to set up shop in the booming southern business hub of Ho Chi Minh City has been hailed as placing Vietnam on the high-tech map, bringing jobs and technological know-how and potentially enticing other international hardware and software companies to follow.

"Intel's decision to invest in Vietnam is the 24-carat gold stamp of approval for Vietnam as a world class investment destination," Walter Blocker, chairman of the American chamber of commerce in Ho Chi Minh City, said.

The plant, Vietnam's largest high-tech project, accounts for more than two thirds of the country's foreign investment capital so far this year, said the Vietnam Investment Review weekly.

California-based Intel will employ about 2,000 workers at the 46.7 hectare (115 acre) plant in the Saigon Hi-Tech Park to make chips and computer parts for export.

Analysts say Intel is attracted to Vietnam because of its low-cost and educated labour force and as part of its drive to diversify its locations across the globe -- but also to target Vietnam's local market in the long term.

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

"This event is a big splash in the development of IT in Vietnam, a very significant step," Henry Nguyen, managing general partner of IDG Venture Vietnam, a Vietnam-based US investment fund, said on Monday.

"Of course, today the reason why Intel comes to Vietnam is mostly because the workforce is (cheap) and can be easily trained.

"But we can hope that in a few years' time, the IT sector in Vietnam will not be only about assembling and producing but also about IT innovation."

Vietnam, a communist nation that launched a broad economic reform programme known as 'Doi Moi' in the 1990s, has enjoyed rapid annual economic growth of 7.0 to 8.0 percent in recent years.

Last June, Intel president Paul Otellini visited Vietnam to sign an agreement with the government to boost communication infrastructure across government bodies and other organisations.

In January, the semiconductor giant posted a disappointing fourth quarter profit, up 16 percent from a year ago to 2.5 billion dollars but still below expectations.

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