Intel spending big in China to catch up

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Intel launches $1.6b upgrade at Chengdu chip factory by Gao Yuan, China Daily

People visit the Intel booth at the 2013 Computex exhibition at the TWTC Nangang exhibition hall in Taipei June 4, 2013. [Photo/Agencies]

Intel Corp is investing up to $1.6 billion over the next 15 years to upgrade its chip factory in Chengdu, Sichuan province.

The US company said the plan includes introducing its latest advanced test technology to the site, along with other upgraded services including die preparation and assembly operations－all technologies used to build integrated circuits, or microchips.

"The strategic intent is a significant step and an important corporate deployment to enhance Intel's business strategies in all computing and communications segments, particularly mobility business in the tablet, smartphone, Internet of Things, and wearable segments," the company said in a statement.

Intel is looking to China to expand its mobile businesses. The nearly 50-year-old multinational missed out on the opportunity to go mobile in the early 2000s as the use of mobile phones grew.

Its x86-based chips were mainly used on desktop computers because of their high-power consumption. Global smartphone makers opted instead for chips built in ARM architectures for better power efficiency.

Intel is hoping makers of smartphones and wearable devices in China will help it win market share from ARM-based chips.

"By bringing Intel's latest technology to China, we have demonstrated our commitment to innovate with China. The full upgrade of our Chengdu facility will enhance the innovative spirit of the Chinese IT industry as well as drive regional economic growth," said William Holt, executive vice-president and general manager at its technology and manufacturing group.

The wholly owned Chengdu operation opened in 2005 and Intel has invested $600 million at the site. Bian Chenggang, vice-president of the company's technology and manufacturing group and general manager of Intel Chengdu, said: "The new investment will further enhance the development of Chengdu and Sichuan's supply chain, attract a new talent pool, and strongly foster local high-tech ecosystem growth."

Liu Dong, managing director of Accenture Technology Labs in Beijing, said local chip makers should get ready to embrace the impact of overseas competitors as China becomes a hub for global electronics manufacturing.

"An increasingly open market will also help the Chinese IC industry grow and catch up with the global market," Liu said.

Last month, China said that a tariff-cutting agreement targeting high-tech products from the US is on horizon, which many see as a positive sign for US companies including Intel and Qualcomm Inc.