Intel Corporation (NASDAQ:INTC) has announced plans to invest $1.6 billion in its factory located in the city of Chengdu in western China, indicating the chip maker’s efforts to revive its ties with a market in which many U.S. companies are lagging behind, says a report from Reuters.
Intel bets big on China
As a part of the upgrade, the chip maker stated that it will bring its most advanced chip testing technology to China. Intel is expecting to get local and regional government support in the construction.
Intel executive vice president William Holt said, “Deploying our newest advanced testing technology in China shows our commitment to innovating jointly with China.” Once complete, the Chengdu plant will help the Chinese semiconductor industry and enhance regional economic growth, said Holt.
Three months ago, Intel bought a minority stake in a government-controlled semiconductor company to work in close collaboration in designing and distributing mobile chips, a strategically important segment for China. Back in May, the chip maker made a similar agreement with Chinese processor vendor Rockchip for expanding its tablet efforts.
Intel will start upgrading its Chengdu facility next year. Advanced Test Technology will be used in mass production of chips in the second half of 2016. Also the company has already invested $600 million in its Chengdu plant, which started operations in 2005. Apart from chips for mobile devices, Intel also plans to develop chips for the “Internet of Things,” which is a growing market.
Foreign companies cry foul in China
Foreign business lobbies have opposed and cried foul over the recent row involving QUALCOMM, Inc. (NASDAQ:QCOM), in which the country initiated a probe of Qualcomm and Microsoft Corporation (NASDAQ:MSFT). These companies are arguing that the Chinese government is trying one or other trick to yield technology sharing and other facilities to domestic players.
However, the Chinese government is arguing that its investigations are fair and that Qualcomm and Microsoft are going through similar antitrust probes in Western countries also. Qualcomm is expected to announce a potentially record-breaking settlement with Chinese antitrust regulators soon.
According to analysts, foreign companies should make greater efforts to stay on China’s good side. Nomura analyst Leping Huang said Intel is going forward with a strategy that is appreciated by the Chinese government, i.e., companies looking to earn money in China should first invest in the country.