Intel is almost ready to announce an expansion of its manufacturing empire into China, according to reports.
Numerous organisations, including The Wall Street Journal and the Financial Times, reported on Tuesday that Intel and the Chinese government have signed an agreement that would see Intel build a $2.5bn chipmaking plant in the northeast port city of Dalian, citing a posting on the website of China's National Development and Reform Commission. An Intel representative declined to comment, saying the company has made no such announcement. The posting could not be found on the English-language version of the site.
But an announcement might be coming within the next few weeks, as Intel gears up for its mid-April Intel Developer Forum in Beijing. If confirmed, the new plant would mark a milestone for Intel and the US chip industry in China.
Intel currently runs assembly and test plants in the Pudong district of Shanghai and in Chengdu in southwest China, but as the name suggests, those facilities merely test and assemble the final packaging for processors made elsewhere. According to reports, the facility would produce 90nm (nanometre) processors on 300-millimetre wafers, a technology generation removed from Intel's current 65nm manufacturing technology.
Moving Intel's chipmaking technology into China is something that has been rumoured for years. One obstacle has been the export controls put in place by several countries under the Wassenaar Arrangement, designed to keep China and other countries from acquiring advanced technology for military purposes. These controls have put limits on what equipment can be brought into the country from the US, and currently extend to lithography equipment capable of producing features smaller than 180nm, according to a list of controlled equipment on a website for the Wassenaar Arrangement.
In practice, however, export licences can be granted so long as companies aren't bringing their latest and greatest technology into the country. Export licences are granted based on a combination of factors, including the export compliance record of the potential license holder, the stated end-use of that technology and the level of technology involved, according to SEMI, a semiconductor manufacturing trade association.
Still, as recently as 2004, Intel chairman Craig Barrett was very pessimistic about building fabs in China. "If I wanted to build a 90nm, 300mm fab in China, the US government would say, 'Absolutely not'. US export controls and regulations do not help US companies compete in China relative to our competition," Barrett reportedly said at an event in San Jose.
But it appears Intel is getting ready to do just that, although such a plant is not as state-of-the-art as it was in 2004.
By the time this potential plant could be operational, 90nm manufacturing technology will be a full two generations behind Intel's most advanced 45nm technology. Chipmakers tend to use older manufacturing technology to build chipsets and low-end processors, with the most advanced designs saved for the latest and greatest stuff.
For this reason, it seems illogical that Intel would choose to invest $2.5bn for a fab that will be old news by the time it is built, said Risto Puhakka, an analyst with VLSI Research. He expressed surprise at the news but suggested that Intel could be trying to get a foothold in China if export restrictions are loosened down the road, if the reports are true.
China already has a home-grown foundry, Semiconductor Manufacturing International, which is building 90nm chips for its customers. But it needed the help of an outsider — Qimonda, the memory maker formerly known as Infineon — to get its 90nm technology into logic development.
