Intel Opens Manufacturing Plant in China

Intel on Tuesday opened its first chip plant in China, a $2.5 billion project that was initially announced in 2007 and will produce chips on 12-inch silicon wafers intended for desktop computers, laptops and servers.

Santa Clara, Calif.-based Intel says it has already begun doing business with more than eighty existing suppliers based in Dalian, in northeastern China, where the plant is located. Intel did not name any of its new partners, but acknowledged the mutual benefits of the project at length in a press release.

"For 25 years now, Intel has been investing and innovating in China with China and for China," Chief Executive Officer Paul Otellini said in a statement. "This manufacturing facility helps deliver on our vision to contribute to sustainable growth in China while giving us better proximity to serve our customers in Asia."

The plant, which is Intel's first to open outside the U.S. since 1992, establishes a semiconductor industry presence in China with the capacity to design chips as well as manufacture them. According to Reuters ,the Chinese government is looking to go beyond inexpensive manufacturing by developing cutting-edge technology but has had to deal with market fragmentation which Intel's project would largely avoid.

The plant in Dalian is part of Intel's $4.7 billion total investment commitment to China. Intel has also established an assembly and test site in Chengdu and R&D centers in Beijing, Shanghai and elsewhere in China, the company said in a statement.

Next: Intel's Investment In U.S. Plants

However, since its initial announcement, Intel has repeatedly denied rumors that it was considering delaying, scaling-back or even canceling the opening of the plant altogether.

Intel last week said it plans to invest between $6 billion and $8 billion in fabrication plants in Oregon and Arizona which will specialize in small chips for embedded devices, including tablets.