Intel Builds Wafer Fab in China

Reports that Intel was considering building a fab in Dalian surfaced earlier this month, when the Web site of a Chinese government planning agency posted a statement that it had approved plans for Intel to build a facility. The site later took down the announcement, and Intel declined to comment until Monday.

One sticking point is the export control regulations that the U.S. imposes on technology exports to China. Companies are prohibited from exporting leading-edge manufacturing equipment that might have military, as well as commercial, uses.

Intel may hope to avert some of the regulatory hurdles by outfitting the facility with older chipmaking equipment.

Intel said in the announcement that Fab 68 will initially produce so-called chipsets, the chips that support the microprocessors at the heart of PCs and servers. Chipsets can be made using less-advanced manufacturing processes than those used to make microprocessors.

Intel did not disclose which manufacturing process Fab 68 would use, although previous reports indicated the facility would focus on making chips with 90-nanometer-wide circuits. That's one generation behind Intel's current 65-nanometer microprocessors and would be even further behind by the facility's 2010 launch.

Shares of Intel were off 13 cents at $19.14 in midday trading Monday.