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Intel confirms $2.5B, 300mm-wafer China plant

BEIJING, China (Reuters) -- Chip giant Intel said on Monday it would invest $2.5 billion to build a microchip plant in northeastern China, with the production of chipsets to begin in 2010.

Groundbreaking is scheduled for July for the 300mm-wafer fab in Dalian, which will be Intel's first semiconductor plant in Asia, chief executive Paul Otellini told reporters.

"China is our fastest-growing major market and we believe it's critical that we invest in markets that will provide for future growth to better serve our customers," said Otellini.

The greenfield project will become Intel's eighth 300mm factory, adding to a network spread across the United States, Ireland and Israel, the company said in a statement.

The 12-inch wafer plant will have a monthly capacity of 52,000 wafers and will use 90-nanometer technology to produce chip sets, China's National Development and Reform Commission had said earlier this month.

Chipsets are the collection of secondary chips and interfaces that surround the main processor and will be used in desktop computers, laptops and other electronic devices.

The investment comes on top of the $1.3 billion Intel has spent on major test and assembly plants on the mainland.

The 300mm wafer plant would use 90-nanometer technology, the most advanced technology to be used in China to date, but still a generation or two behind the cutting edge.

Intel has U.S. government approval to export 90-nanometer technology through 2009. But since the plant won't begin production until 2010, it could go to 65 nanometer if additional licenses were granted, the company said.

The 300mm-wafers lower production cost per chip while consuming 40 percent less energy and water per chip than a 200mm wafer factory.

Intel is in the midst of a major overhaul, including price and job cuts and new product roll-outs, as it works to stave off recent advances by rival Advanced Micro Devices, which has gained market share in the last few years.

Until now, most foreign chip makers have used China for lower-technology test and assembly work, with few doing more sophisticated production.

CNN, 26 March 2007