Intel Corp is considering investing up to US$5.5 billion to make semiconductors in China.
The US giant is stepping up efforts to improve ties with Beijing as it seeks new revenue streams while demand for its core computer processing chips falters.
Intel is planning to convert a facility in Dalian, its first plant in China, into a factory to make memory chips, Reuters reports.
It did not disclose a time period for the investment but said it will start making advanced memory chips that can store data without using up power, called 3D NAND chips, in the second half.
The move follows a flurry of deals in the global semiconductor industry, highlighting the growing importance of memory chips used to store data in increasingly popular mobile devices.
Researcher TrendForce predicts China will consume US$6.67 billion worth of NAND chips this year, or 29 percent of global NAND industry revenue.
Building a chip industry of its own has been deemed of strategic importance by China in its drive to modernize its economy.
Intel’s new investment follows a deal last year to buy 20 percent stake of two mobile chipmakers owned by state-backed Tsinghua Holdings Co Ltd.
Intel’s latest move raises concerns that new memory supply from the chipmaker could undercut margins for leading industry players like South Korea’s Samsung Electronics Co Ltd and SK Hynix Inx, and Japan’s Toshiba Corp.
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