Intel To Build $2.5 Billion China Chip Plant

Goal is to make this plant the most cost effective in Intel's network, said CEO Paul Otellini.

Intel said March 26 that its new integrated wafer plant in China, called Fab 68, will be the first of its kind for Intel in Asia, bringing sophisticated technology to a nation more famous for its status as the world's low-end factory floor. The plant will cost $2.5 billion.

"We would likely look to put in production the most advanced technology that is available under our licensing policy from the U.S. government at the time," Intel President and CEO Paul Otellini said, referring to U.S. controls on the sale of potentially sensitive technology that may also have military uses.

Initially the plant, in northeast China's Dalian city, will focus on less advanced chipsets for computers although Intel did not rule out gradually incorporating more advanced technology.

"Our objective is to have this be the most cost-effective wafer plant in our network and... to be able to try out new technology and new techniques of manufacturing to lower our costs," said Otellini.

Construction of Fab 68, which will produce the 300-millimeter (12-inch) wafers on which microchips are built, is scheduled to begin later this year with production slated for the first half of 2010.

"Fab 68 will be our first new wafer fab at a new site in 15 years ... This new investment will bring our total to just under four billion dollars, making Intel one of the largest foreign investors in China," a company statement said. It is the first time since 1992, when Intel established its Fab 10 in Ireland, that the company has built a plant from the ground up at a brand new site.

When completed, Fab 68 will be part of an Intel network which by 2010 will include eight top of the line 300-millimetrr factories, with other fabs located in the U.S, Ireland and Israel.

"The biggest impact will be the improvement in China's manufacturing technology and that's what other countries are afraid of," said Patrick Liao, a Taiwan-based semiconductor specialist with International Data Corp.

Copyright Agence France-Presse, 2007

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