Intel plans wafer plant in China

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Intel is expected to test political opposition in the US to high-tech exports, with its plans to build a manufacturing plant in China.

Paul Otellini, chief executive of the world’s biggest semiconductor maker, is expected to announce details of a $2.5bn wafer fabrication facility in Dalian, north-east China, at a press conference in Beijing on Monday.

The site would be its first such facility in Asia and its largest single investment in the region.

The move would underline the growing importance of China to Intel – it is its fastest-growing major market – as well as bringing to the fore US sensitivities over exports of key technologies.

Intel is understood to have gained a US export licence to make chipsets with circuit widths of 90 billionths of a metre or nanometres. Chipsets supplement the company’s microprocessor technology.

Intel is producing 65 nanometre processors and is due to have reduced sizes further to 45nm and then 32nm by the time that the Dalian plant begins production.

The 90nm chipsets would therefore be older technology by then, making the granting of the export licence relatively uncontroversial.

Intel could push for changes to the licence to allow the export of more miniaturised chips that could even include its microprocessors.

Rob Enderle, technology analyst at the Enderle Group, says Intel’s Chinese facility is intended to cut costs by bringing a range of its products closer to a market it is increasingly serving.

“China is very funny about you having some skin in the game if you want to do business there.

“You’ve got to assume what they put in there will probably not be 90nm. That is just to get them started. What they will end up building will be more advanced.”

This could lead to opposition in Washington, where Congress is concerned at China’s growing influence on the US economy. Questions would be asked about exporting high-tech know-how that could be adapted for military use or put the US at a competitive disadvantage.

Intel may also come under fire from those people who argue that too much manufacturing capacity is going overseas. However, it can point to investing about $8.5bn in US manufacturing in the past three years.

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