Intel to expand chip-making in China?

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, have reported 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 90-nanometre processors on 300mm wafers, a technology generation removed from Intel's current 65-nanometre manufacturing tech.

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 180 nanometres, 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 licence holder, the stated end-use of that technology and the level of technology involved, according to Semi, a semiconductor manufacturing trade association.

Tom Krazit writes for CNET News.com