Intel ramps up for Pentium 4 assembly in China
January 15, 2003 02:45:00 AM ET
By Doug Young
HONG KONG, Jan 15 (Reuters) - Semiconductor giant Intel Corp (INTC) is set to begin its first CPU assembly in China this year at a newly upgraded US$500 million plant, even as the company announced plans for a major cut in capital spending in 2003, its Asia-Pacific chief said on Wednesday.
The Shanghai plant where the assembly and testing of Pentium 4 central processing units (CPUs) will take place has undergone a US$300 million overhaul in the last few years in preparation for the shift, said Jason Chen, Intel Asia-Pacific's general manager.
"Our plan is to start test and assembly for Pentium 4 this year," Chen told Reuters in a phone interview.
"This will be our first time assembling CPUs in China...Our plan is to start later this year, and our progress is on track."
He did not say how many units would be produced initially.
The brisk investment level in China contrasts with Intel's scaled-back capital expenditure plans for 2003, which were announced on Tuesday in the United States when the company reported its fourth-quarter results.
Intel said it plans to scale back its 2003 capital spending by as much as 25 percent company-wide, to US$3.5 billion to US$3.9 billion compared with US$4.7 billion in 2002.
Chen would not comment on individual capital spending plans for Asia, saying the company does not pubicly disclose its such plans for its individual regions.
He said Intel's Asia-Pacific region accounted for 38 percent of company revenues for the three months ended December 31 -- the fourth consecutive quarter the region has been Intel's best revenue generator.
FLASH MEMORY ORIGINS
The Shanghai plant where Pentium 4 assembly will take place was set up in 1996 with an initial investment of US$100 million, and originally produced flash memory units.
Intel later invested another US$100 million and upgraded to chipset production. The most recent upgrade will bring Intel's total investment in the facility to US$500 million by the end of this year, Chen said.
Elsewhere in the region, Intel has similar assembly plants in the Phillipines and Malaysia.
The upgrade of its Shanghai plant to CPU assembly status reflects Intel's growing relationship with China, where its customer base has expanded rapidly in recent years.
Intel's China-based customer list is a who's who of the country's up-and-coming computer and telecom gear makers, many of which are just starting to try and expand beyond their traditional Chinese markets.
Intel's customers include two of China's top computer makers, Legend Group Ltd and Founder Group Corp, Chen said.
In telecommunications, the company works closely with TCL , Motorola's (MOT) China ventures and Zhongxing Telecom (ZTE) , Datang Telecom & Tech Co and privately held Huawei.
"We have a long-term in-depth relationship with the local industry, and those are just the hardware manufactureres," Chen said. "We work with the software industry as well, including about 14 Linux companies in China and system integrators." REUTERS
