Intel Investing $2.5 billion

ntel Corp said it chose China for its first new computer-chip factory in 15 years, investing $2.5 billion to be closer to customers in a country that assembles about 50% of the world’s personal computers.

Construction begins later this year and the factory will start production of computer chipsets in the first half of 2010, chief executive officer Paul Otellini said at a news conference in Beijing on Monday. The plant raises Santa Clara, California-based Intel’s investments in China to almost $4 billion.
The factory will bring Intel, the world’s largest semiconductor maker, closer to chip buyers including Lenovo Group Ltd, which acquired International Business Machines Corp’s PC business in 2005, and Dell Inc in China. The decision may also help alleviate concern that China doesn’t do enough to protect intellectual-property rights, analysts say.

“Intel is building goodwill with the Chinese government to be able to sell microprocessors to Chinese PC companies,’’ Daniel Heyler, an analyst at Merrill Lynch based in Hong Kong. Intel “is a very high profile company and they need to show the mainland government they are committed.’’

Shares of Intel rose 0.6% to $19.27 in Nasdaq Stock Market trading on March 23. The shares have fallen 4.8% this year. The new factory in Dalian, a northeastern city located on a peninsula by the Yellow Sea, will be Intel’s first chip factory in a new location in 15 years.

Intel joins STMicroelectronics NV, Taiwan Semiconductor Manufacturing Co and South Korea’s Hynix Semiconductor Inc among chipmakers building factories in China.

China became the world’s biggest chip market in 2005, after passing the Americas region. Sales of chips to the country will rise to $111 billion in 2011, from $39 billion in 2005, according to Scottsdale, Arizona-based IC Insights Inc. China’s PC market, the world’s second largest, may rise more than 24-times faster than the US over the five years ending 2011, according to researcher IDC. Sales of computers in China may increase 53% to $24.3 billion in 2011 from $15.9 billion last year, compared with a 2.2% increase in the US, according to the researcher.

source:www.financialexpress.com