UPDATE 2-HP to expand PC manufacturing in China

(Adds deal details)

NEW YORK, Oct 9 (Reuters) - Hewlett-Packard Co HPQ.N plans to operate a computer manufacturing plant in China's Chongqing area, expanding its presence in Western China in order to better serve that local market.

The Chinese government will build the 20,000-square-meter facility in Chongqing, HP said on Thursday. The company plans to make notebook and desktop PCs, according to the terms of a memorandum of understanding with the Chongqing Municipality.

China, the world's second-largest personal computer market by unit sales, is dominated by Beijing-based Lenovo Group 0992.HK.

“When in full operation, the HP-managed plant is expected to have the capacity to meet market demand in Chongqing as well as other parts of China across government, public and retail sectors,” HP said in a statement.

A spokeswoman for HP, the world’s biggest computer maker, said the company gets product from China via plants it runs and from its original equipment manufacturing partners.

HP, which says it is the leading foreign manufacturer of PCs in China, said it expected manufacturing operations at the Chongqing facility to begin in 2010. The company also has manufacturing operations in Shanghai.

Countries like Brazil, Russia, India and China -- the "BRIC" nations -- have supported global sales for HP, Dell Inc DELL.O and many other big technology companies. (Reporting by Franklin Paul; Editing by Gerald E. McCormick and Lisa Von Ahn)