people still doubt that China has the skills and infrastructure to
manufacture sophisticated hi-tech products like silicon chips. Intel
does not.

The US chip giant is about to make its boldest bet yet on China's
fast-growing chip industry by announcing its first manufacturing
facility in the PRC.

In Dalian to be precise, where the chip firm plans to spend $2.5bn
building a fab to make multi-core microprocessors using 90nm process
technology — not quite the state-of-the-art in semiconductor
manufacturing, but only one generation behind.

According to the Wall Street Journal, the announcement could come
next Monday, when Intel's CEO Paul Otellini is due to speak at an Intel
press conference in Beijing whose subject is tantalisingly vague —
“Intel's commitment to China”.

Beijing recently gave the US company approval to build a wholly-owned plant in the port city so it seems that the long-awaited announcement from Intel is a mere formality.

Intel makes most of its chips in the US although it also has
manufacturing operations in Ireland and Israel. While it already has
two facilities in China, these are much simpler chip assembly &
testing operations.

Most foreign chip makers continue to see China as primarily a
low-cost location for A&T operations and their capital-intensive
fabrication plants – which etch the chips out of silicon wafers — tend
to be located in more established locations in Asia and the west. See this earlier EngagingChina story for more on China's A&T industry.

Intel's putative fab in Dalan would be a “breakthrough for China's
efforts to build a strong semiconductor sector,” according to the
Financial Times, although it will reignite the debate about the US
transferring so-called “strategic technologies” to a potential rival
like China.

Like other chip makers, Intel is strengthening its presence in China
because that is where its customers increasingly are found. Much of the
electronics manufacturing — and increasingly development — that once
took place in Japan, Taiwan and the west is now shifting to China.

Indeed, in a bid to get closer to electronics developers in China, next month Intel will hold its Intel Developer Forum in Beijing, the largest ever held in China.

More on Intel's China ambitions in this CNET story.