Intel invests US$170M in China, Dalian fab on track

BEIJING – Saying Intel will invest its way through the current economic crisis, president and CEO Paul Otellini put the company’s money where his mouth is Tuesday, announcing US$170 million to be spent on new projects in China.

“Gordon Moore is the one who said ‘you can’t save your way out of a downturn.’ Craig [Barrett] believed that, Gordon believed it and I believe it. Our investments next year remain intact,” Otellini said at a press event in Beijing.

Intel said it was investing $150 million in 67 projects around China, some in conjunction with other companies including Lenovo, Haier, Neusoft and Tsinghua University. It did not elaborate on the nature of those programs, except to say they would “support the advancement of China’s IT ecosystem and home-grown innovation.”

Intel Capital also announced an additional $20 million investment in three companies working on clean technology projects, two of which, NP Holdings and Shenzhen-based Trony Solar, develop energy storage and solar film, respectively. The third investment went to ViewHigh Technologies, which develops software and services for the health-care industry. Intel Capital did not indicate the investment split among the three companies.

The company’s most significant investment won’t necessarily be with cash, but with new technology. “The biggest investment is that we will deploy 32-nanometer technology next year into production, well ahead of the rest of the industry,” he said, but did not give a date for the deployment.

Otellini had spent the early part of Tuesday in the northeast Chinese city of Dalian, where the company is building Fab 68, a $2.5 billion, 300-mm wafer fabrication plant, announced in March 2007. He said the facility’s construction was on track, and would open in 2010.

He also addressed the shortfall in the production of Intel’s netbook processor, Atom. “I would expect our supply will catch up with demand by the end of the year,” Otellini said. “We had a very aggressive plan to ramp Atom volume over the course of 2008. To everyone’s surprise, the demand was much better than they forecasted, and so we’ve been ramping production to meet the unforecasted demand since then.”

As to the financial crisis’ potential impact on Intel, Otellini said, “I did not foresee the economic downturn, but the fact that we did restructure ahead of that put us in a very good position to be able to weather this storm and not change our investment profile.” Intel cut more than 10,000 jobs during 2006 and 2007, in a move designed to save the company between $2 billion to $3 billion annually.

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