Intel opens first chip manufacturing plant in China

IDG News Service - Intel announced the opening of its first ever chip manufacturing facility in Asia on Tuesday, in Dalian, China.

The US$2.5 billion chip factory is producing chips on 12-inch (300-millimeter) silicon wafers, mainly chipsets to be used in desktop computers, laptops and servers, Intel said. The factory is already fully operational.

When it was originally announced in 2007, the factory project raised eyebrows because it was a major commitment by Intel to produce its chips in an advanced factory in China, where intellectual property and national defense concerns play a role. The U.S. government had to give a go-ahead on technologies related to the project due to defense policies that aim to prevent advanced technologies from falling into the hands of countries that might use them in weapons-making.

The Dalian factory is Intel's first at a completely new site since 1992. New sites are more difficult to open because such chip factories require numerous services and utilities to support their output. The factory space inside is roughly the size of 23 football fields, Intel said.

The manufacturing facility is using 65-nanometer production technology. Using 65nm technology, Intel can etch transistors onto chips that are 1,400 times thinner than a human hair. A nanometer is a billionth of a meter, about the size of a few atoms combined. Companies constantly strive to reduce the size of transistors and other parts on a chip in order to make them speedier and operate more efficiently.

However, U.S. regulations hold Intel back from using its latest production technology in China. The company is currently deploying 22nm technology in the U.S.

Intel called the factory opening a milestone in its 25-year relationship with China, and said it will develop the local workforce as well as attract suppliers and other high-tech companies to the Dalian area.

The new factory "helps deliver on our vision to contribute to sustainable growth in China while giving us better proximity to serve our customers in Asia," Intel said.

The company estimated that two dozen other companies have already directly invested in Dalian to position themselves to do business with Intel, while the company has already started doing business with 80 existing suppliers in Dalian.

The completion of the Dalian factory raises Intel's investment in China to $4.7 billion, the company said. Aside from the new factory, Intel also has a large chip testing and packaging facility in Chengdu, as well as research and development centers in Beijing, Shanghai and elsewhere in China.