Intel confirms 300-mm China fab plans

By Suzanne Deffree -- Electronic News, 3/26/2007

Intel Corp. today confirmed its plans to build a 300-mm fab in China, a first for the chipmaker in Asia.

Officially offering details for the first time since rumors of the fab began to stir in January, Intel said Fab 68 will be located in the coastal Northeast China city of Dalian in Liaoning Province and will come at a $2.5 billion investment.

“China is our fastest-growing major market and we believe it’s critical that we invest in markets that will provide for future growth to better serve our customers,” Intel President and CEO Paul Otellini said in a statement. Indeed, China’s IC industry sales hit $13 billion in 2006, a more than 43 percent increase over 2005 numbers, propelling one research firm to say that the industry has once again entered high-speed growth.

“Intel has been involved in China for more than 22 years and over that time we’ve invested in excess of $1.3 billion in assembly test facilities and research and development. This new investment will bring our total to just under $4 billion, making Intel one of the largest foreign investors in China,” Otellini said.

The move is significant for Intel’s development of business in the Asia-Pacific region and also for United States-China trade relations, marking a major shift between the two countries. Recent reports have stated that the two economies, particularly in the technology spaces, will have a stronger bond in the future.

"This is one of the major cooperative projects between China and the United States in the area of integrated circuits manufacturing in recent years,” said Zhang Xiaoqiang, vice chairman of China’s National Development and Reform Commission, in the statement. “The project will further strengthen Intel's leadership position in the semiconductor manufacturing in the world. At the same time, the investment in Dalian will have a positive impact to the regional economic development and the development of integrated circuits industry in the old industrial base of northeast China. We welcome Intel and other multinational companies to invest and cooperate with China.”

Intel noted that Fab 68 will be its first new wafer fab at a new site in 15 years, with Ireland’s Fab 10 build in 1992 being the most recent. Construction on Fab 68 is slated to begin later this year with production projected to begin in the first half of 2010. While Intel said initial production will be dedicated to chipsets to support its core microprocessor business, the company did not detail capacity in its statement today. Previous reports have pegged monthly capacity at 52,000 chips on 90-nm manufacturing.

When completed, Fab 68 will become part of Intel’s manufacturing network that includes eight 300-mm factories in 2010 with other fabs located in the United States, Ireland and Israel.

Intel has shown further recent interest in China, just last week leading a series D private equity investment round worth up to $40 million in Legend Silicon Corp., a Beijing-based fabless semiconductor company that manufactures the core IC for digital broadcasting and broadband transmission.