Intel opens first chip plant in China

TAIPEI (Reuters) - Chip heavyweight Intel Corp opened its first chip plant in China on Tuesday in a move that said could help boost China’s economy, several years after the U.S. firm first announced the $2.5 billion project.

“For 25 years now, Intel has been investing and innovating in China with China and for China,” Chief Executive Officer Paul Otellini said in a statement.

“This manufacturing facility helps deliver on our vision to contribute to sustainable growth in China while giving us better proximity to serve our customers in Asia,” said Otellini, who spoke at the official opening ceremony in Dalian.

It has taken an unusually long time to build the plant, located in the northeastern city of Dalian, which was announced with fanfare in 2007 as Intel’s first front-end semiconductor fabrication unit in Asia in a nod to the growing importance of the China market.

In the three-plus years since the first announcement, rumors had repeatedly said that Intel might delay, scale back or even scrap its plans for the plant, although the company consistently denied that anything was amiss.

China has struggled for years to build up a globally competitive semiconductor industry as it tries to move up the tech value chain, but has largely failed due to the sector’s fragmented nature and less developed technology.

An estimated two dozen companies have already directly invested in Dalian so they are better poised to do business with Intel, which has started doing business with more than 80 existing suppliers based in Dalian, Intel said, without identifying them.

The new plant fulfills Intel’s total investment commitment in China to $4.7 billion. Intel has also established an assembly and test site in Chengdu as well as R&D centers and labs in Beijing, Shanghai and elsewhere in China, it said.

Reporting by Baker Li; Editing by David Chance