Intel may invest $5.5b to upgrade Dalian factory

Intel Corporation, the world's largest semiconductor chip maker, may invest up to $5.5 billion in its plant in Dalian in Northeast China's Liaoning province, to convert the factory for the production of non-volatile memory chips, a term that refers to chips that retain data after power is turned off.

The site, which began operations in 2010, is expected to start manufacturing the chips by the end of 2016.

Keyvan Esfarjani, vice-president of the California, United States-based multinational, said it will invest up to $3.5 billion in the next three to five years, and that may subsequently increase to $5.5 billion.

"Non-volatile memory-based solid-state drives are a strong part of Intel's core computing business and a key part of its growth strategies.

"This expansion is part of our global strategy to grow our business and support the growing demand of our customers."

Esfarjani said the investment, which will make Dalian the company's first global integrated circuit manufacturing center for 300-millimeter non-volatile memory products, would also "contribute to Northeast China's revitalization, and upgrade of China's manufacturing economy".

Yang Xu, president of Intel China, said the investment is the largest made by Intel in China.

The US firm has a joint venture with fellow US-based memory chip manufacturer Micron Technology Inc to produce various types of non-volatile storage products, which are widely applied in mobile devices and computers.

Micron officials said it may use products built in the Dalian plant, and they anticipated increasing its participation in the site in future.

Wu Lianfeng, an analyst with IDC Consulting Ltd, said that global sales of memory chips are declining but China still maintains robust double-digit growth.

He said Intel's upgrading of the Dalian factory would help promote and support development of the country's wider chip manufacturing industry.

"China is the largest chip market, enjoying huge and continually growing demand," said Wu. "This increased investment showed Intel has confidence in expanding its business in the market."

An August report from PricewaterhouseCoopers said the Chinese market accounted for a record 56.6 percent of global semiconductor chip consumption at the end of last year.

The study suggested the global market grew 9.8 percent in 2014, but in China by 12.6 percent.