Intel Wins $2.5 Billion Plant Approval In China

The new semiconductor plant will have a monthly capacity of 52,000 chips.

In what would be a major expansion of its presence in the Asian nation, Intel has won China's approval to build a $2.5 billion semiconductor plant, the government said March 13. The 12-inch (300-millimetre) integrated wafer plant in Dalian city in China's northeastern Liaoning province will have a monthly capacity of 52,000 chips, the National Development and Reform Commission said.

All funding for the plant will be raised by an Intel subsidiary, Intel Asia Holdings, China's key economic central planner said.

Intel, which has invested about one billion dollars in China so far, already has major assembly and test operations in Shanghai and Chengdu, in the country's southwest. With the construction of the factory Intel would join Taiwan Semiconductor Manufacturing Co. (TSMC) and Hynix Semiconductor as one of the few foreign groups to produce chips in China, where intellectual property rights piracy issues abound.

At 90 nanometers, the chips made in Dalian will be some of the most advanced semiconductors manufactured in China. "The main use of the chips will be for CPUs (central processing units)," the statement said. Most of the computer industry uses chips based on 90-nanometer technology, a scale that allows for about 1,000 transistors on an area the width of a human hair. The more transistors, and the closer they are together, the quicker the chip performs tasks. But smaller technologies that increase performance and reduce power consumption are already well developed, with the 65-nanometer generation processor already in application. Intel's 45-nanometer processor is reportedly expected to come on line in 2008.

Financially, Intel has recently struggled to fend off competition from other major chip makers like Advanced Micro Devices and is in the midst of a major restructuring program. The company's fourth quarter profits fell 39% from a year ago to $1.5 billion. Intel ended 2006 with a workforce of 94,100, down from 102,500 as a result of lay-offs and restructuring announced in September last year that promises to cut costs by two billion dollars in 2007.

Copyright Agence France-Presse, 2007

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