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China’s government is considering a plan by Intel of the US to build a chipmaking plant in the north-eastern city of Dalian, say local industry officials.

Construction of such a fabrication plant, or fab, by the world’s biggest chipmaker would mark a breakthrough for China’s nascent semiconductor industry and a major expansion of Intel’s presence in the rapidly growing Chinese IT market.

It could also fuel concerns in the US about the transfer of leading technology to China, which some in Washington see as an economic and military rival.

Intel has chip assembly and test facilities in Shanghai and the western city of Chengdu but has held back from manufacturing in China.

China’s leading chipmakers are all foreign-owned but no company with the global presence of Intel has chosen to make the country a manufacturing base.

An application for a fab in Dalian was submitted to the central government, according to two industry officials who declined to be identified.

One said: “Now we have to wait for the approval of the higher-level leaders and departments.” The other said a formal announcement could be made about the time of China’s Lunar New Year next month.

Intel declined to respond to the officials’ comments or discuss in detail its plans for new investments in China.

“We’ve said many times before we’d be interested in building a wafer fab in China, but we haven’t announced any plans,” said Chuck Mulloy, Intel spokesman at its Silicon Valley headquarters.

The factory is not expected to make microprocessors given the difficulty of gaining an export licence from the US government for such sensitive technology.

Chip manufacturing facilities cost upwards of $2bn and the factory would represent Intel’s biggest single investment in Asia, a region that represents the fastest growing and largest geographic segment for the company.

A Beijing-based spokesperson said Intel routinely considered new sites for its operations and China was “one of our target countries”.

The Chinese officials declined to give details of the planned Dalian fab or to say how much it was likely to cost. One said: “Although the investment will be very big, it will be made in stages, and the final figure …has not yet been fixed.”

Intel has already committed $1.3bn to China and employs 7,000 local staff. Intel’s top executives have made repeated visits to China, with Craig Barrett, chairman, meeting the Chinese vice premier in November.

The company has had a presence in China for more than 20 years and employs over 6,000 people. It launched a $200m venture capital fund in 2005 dedicated to Chinese companies.

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