Intel to build second facility in China

AUG. 27–HONG KONG–Chipmaking giant Intel Corp. says it will build a $375 million assembly and test plant in western China that is slated to begin operations in 2005 or 2006.

Construction on the plant in Chengdu, in Sichuan province, will begin in the second half of 2004 and is expected to be completed in 2005, Intel spokesman Chuck Mulloy said late on Tuesday.

The company plans to invest about $200 million initially, followed by $175 million over an unspecified period of time. The plan will employ about 675 people, mostly hired locally.

Intel already has a testing and assembly plant in China, in Pudong, outside of Shanghai, and has invested $500 million there since it opened in 1999, according to Mulloy.

The Chengdu investment is part of Intel’s drive to diversify its production base in China, which became its second biggest market last year after the United States, said Wee Theng Tan, president of Intel China.

The choice of Chengdu also fits with China’s ambitions to develop its western interior areas, which are generally poorer than the coastal areas and have been largely overlooked by most major multinational technology firms to date.

“China is a huge market for Intel,” Tan said in a phone interview from Chengdu.

“The west China market is an important part of the overall equation as well. So it supports our agenda to put a site that supports our business objective, which is growing the market and supporting the growth.”

About 40 percent of Intel’s sales come from the Asia-Pacific region, making it the largest geographic segment for the Santa Clara, California-based company.

“China has been our fastest-growing market for the last couple of years,” Mulloy said.

Other Intel assembly and test plants are located in Costa Rica, the Philippines and Malaysia.

Earlier on Tuesday, Intel launched a $40 million design and development center in Penang, Malaysia.

At the opening, Chief Executive Craig Barrett said Intel planned to invest in China, India and Russia for “new growth” next year, and would also expand existing facilities in Malaysia and the Philippines.


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