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Intel will build a new factory in China at low cost

The chipmaker will also benefit from the lower costs of building the factory in China, and equipment for the new factory will be transferred from an older one, making Intel’s cash outlays for the new plant negligible, according to Bob Johnson, Gartner analyst.

This helps explain why Intel agreed to build the factory, which marks a departure from normal company practices. Intel normally builds chip factories with the latest chipmaking technologies, but in this case this will use relatively old manufacturing technologies.

“This new factory radically departs from the standard that Intel practices,” Johnson stated, but it is also “fully compatible with Intel’s proven ability to make the most of its first investment dollar. The bottom line is that Intel will get a new factory with minimal cash outlay. “

Intel has not said how much it received in incentives, but President Paul Otellini said last week that support from the Chinese government played a major role in the company’s decision to build the $ 2.5 billion factory in Dalian, on the northeast coast. from China.

“Incentives are a normal part of the investment for semiconductor manufacturers. But we don’t disclose the specifics of those incentives, “said Nick Jacobs, an Intel spokesman in Singapore.