Intel Corp, the world's biggest computer-chip maker, plans to invest US$375 million to build a second factory in China, expanding to take advantage of lower-cost manufacturing in the company's second-largest market.
Intel will invest an initial US$200 million and hire 675 people for a plant to assemble and test semiconductors in the southwestern city of Chengdu, the company said in an e-mailed press release. The company, which already has a plant in Shanghai, plans to spend as much as US$175 million more and add workers later.
The venture is a boost for China's efforts to develop its chipmaking industry and for the government's campaign to attract investment to the country's underdeveloped western hinterlands.
Asia-Pacific, where Intel is building more factories to take advantage of lower labor costs and rising demand, was the only region where the US company increased sales last year.
Intel expects construction on the Chengdu plant to start in the first half of next year and the site to begin operating in 2005.
"We weren't compromising in our choice of Chengdu," Intel China president Tan Wee Theng said in an interview. "We took the quality of labor, the infrastructure and other factors into consideration of various cities in China."
The Chengdu operation will package chipsets for Intel's Pentium 4 processor, Tan said. Products made at the plant will be sold worldwide, he said.
Intel joins other overseas chipmakers including ON Semiconductor Corp in investing in Sichuan. ON Semiconductor last year said it would increase investment in its Leshan-Phoenix Semiconductor venture, becoming the first overseas company to make six-inch silicon wafers in western China. The Leshan venture, set up in 1995, employs 1,800 people.
Intel is investing in plants and offices in countries such as China, the Philippines, Malaysia and India to take advantage of lower wages and increasing appetite for electronics. The company's Asia-Pacific sales rose 21 percent last year to US$10.1 billion.
Sales in the US, Europe and Japan all fell.
China is now Intel's second-largest market, Tan said. All Intel's test and assembly operations are in Asian countries, he said.
Intel has a US$500 million factory in the Pudong development zone in eastern Shanghai, spokesman Chuck Mulloy said. It also has marketing and research facilities in the country.
Intel would consider building a chip-manufacturing plant in China if the US lifts security restrictions that prevent the export of advanced technology, chief executive Craig Barrett said last week, the Wall Street Journal online reported.
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