Intel Gets Approval To Build $2.5 Billion China Fabrication Plant

SHANGHAI — Intel Corp has won approval to build a $2.5 billion, 12-inch wafer plant in northern China for CPU chip sets, according to a statement issued Tuesday from China's National Development and Reform Commission.

The plant would use 90-nanometer technology and produce 52,000 wafers a month at full capacity, according to the NDRC, which is China's top planning group. The plan calls for the fab to be in the city of Dalian.

Little more was known, but sources familiar with the project said an announcement is expected from Intel in the next few weeks.

Intel spokesman Chuck Mulloy said, "We have announced no plans and will not comment on speculation of this nature."

If true, the development could have wide-ranging impact on the US semiconductor industry. The US government exercises tight control over the export of advanced high-tech manufacturing techniques, and that should restrict Intel from using anything under 0.18 micron in China. Even its NOR flash is made on more advanced processes.

Intel building a fab in China would signal a loosening of export control policy, and allow US semiconductor gear makers to increase sales to China. Yet such a development would also contradict a current Bush administration attempt to tighten export control policy in regards to China.

In January, an official at the Dalian Economic Technological Development Zone confirmed that it was in talks with Intel. "It's not only for packaging," the official said, declining to offer more details.

China is Intel's second largest market behind the US, so there is good reason for the company to consider putting a plant here. Chipsets would be a way to experiment with advanced production here. Currently, Intel also farms out some of its chipset production to Asian foundries.

Yet there is also good reason to be skeptical about such a project. Rumors that Intel will build a chip plant in China have cropped up perennially for at least five years. Each time nothing has happened, or the "advanced" chip making facility turned out to be a chip packaging plant. Intel runs such plants in Shanghai and Chengdu.

Long-time rumors have also held that Intel will build a plant in India.