Intel to Make Microprocessors in China

by Anton Shilov
03/27/2007 | 10:31 PM

Intel Corp., the world’s largest maker of x86 microprocessors and supporting core-logic products, has announced announced plans to build a 300mm wafer fabrication facility in the coastal Northeast China city of Dalian in <%BANNER[article]%>Liaoning Province. The $2.5 billion investment for the factory designated Fab 68 will become Intel’s first wafer fab in Asia and adds significant investment to Intel’s existing operations in China.

“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 Intel president and chief executive Paul Otellini.

Nowadays companies need to create business models that balance the markets where they receive revenues and where their production costs are. Currently Intel produces its microprocessors in Israel, Ireland and the United States, but a significant part of its revenue is coming from Asia, meaning that in certain situations the company may find itself in an uncomfortable position, as its arch-rival Advanced Micro Devices makes processors both in Germany and Singapore.

“Fab 68 will be our first new wafer fab at a new site in 15 years. Intel has been involved in China for more than 22 years and over that time we’ve invested in excess of $1.3 billion in assembly test facilities and research and development. This new investment will bring our total to just under $4 billion, making Intel one of the largest foreign investors in China,” Intel’s chief executive said.

Not since 1992 with the construction of Fab 10 in Ireland has Intel built a fab from the ground up at a brand new site. Construction on Fab 68 is scheduled to begin later this year with production projected to begin in the first half of 2010. Initial production will be dedicated to chipsets to support Intel’s core microprocessor business. Production capacity of the new fab are unknown.

“This is one of the major cooperative projects between China and the United States in the area of integrated circuits manufacturing in recent years. The project will further strengthen Intel’s leadership position in the semiconductor manufacturing in the world. At the same time, the investment in Dalian will have a positive impact to the regional economic development and the development of integrated circuits industry in the old industrial base of northeast China,” said Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission.