Intel Corp has upgraded its chip factory in Dalian, Liaoning Province in a bid to support the growing demand for memory chips in China amid concerns of competition from local rivals and government efforts to lessen the country's reliance on foreign technology, China Daily reported.
The company has invested about $5.5 billion for the upgrade of the Dalian plant. The plant been improved to enable it to produce advanced memory chips such as 3D NAND chips, which is capable of storing data even without using power and can be widely used in smartphones and tablets.
According to Roger Sheng, research director at consultancy Gartner Inc, digital devices with bigger storage capacities are preferred by the growing number of consumers and the increasing demand for the supply of 3D NAND chips is currently on the decline.
"The Dalian plant will give Intel an upper hand in pouncing at the strategic opportunity," Sheng said. "Mass production of 3D NAND chips will help lower the cost and promote the development of the global semiconductor industry," he added.
According to Intel, the Dalian facility was officially set into operation ahead of schedule, in the second quarter of the year.
The plant is considered to be one of Intel's largest investments in China and also part of the company's plan to look for new sources of income with the weakening of its main PC chip business.
The plant's annual production capacity was not disclosed by the company.
Intel's decision is significant as chips have almost been considered as national strategic assets of similar importance as oil. In 2015, China consumed about $6.67 billion worth of NAND chips, or equivalent to 29 percent of the global NAND industry revenue, according to research company TrendForce.
But as China driving up efforts to encourage local chip giants, Intel will have to compete with local players soon, Fu Liang, an independent industry expert, said.
Tsinghua Unigroup Ltd, the country's largest chipmaker, had earlier announced that it is set to invest $30 billion to produce its own memory chips.