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Kevin Voigt For CNN Adjust font size:
China has finally arrived. The world's fastest-growing economy has long be the outsourcing darling of multinationals in mature markets looking to boost profit margins with low-cost manufacturing, but the announcement this week by Intel -- the world's largest semiconductor maker -- to build a wafer fabrication plant in northeast China was also an announcement of a different kind: The Middle Kingdom has hit the high-tech Big Time. The move will be a boon to China and the industrial town of Dalian -- where the 1,500-employee plant is planned to open in 2010 -- in many ways. Most wafer fabrication plants -- or "fabs" in industry shorthand -- are highly coveted by communities around the world. (Full story) "Everywhere (Intel CEO Paul) Otellini goes, people ask, 'Can we have a 'fab'?" says Jim McGregor, an analyst with in-Stat, a technology market research company. "There are always rumors flying around about where fab plants may be built." For the blue-collar city of Dalian, the plant is a white-collar dream come true. Once built, fab plants become an economic anchor in the community for decades, McGregor says. "It brings high-end jobs, it brings greater investment in education, it brings greater investment in infrastructure," he says. Political importanceMost fab facilities are based in the United States, where high-tech chip production doesn't face national security review and licensing by the government. This the first new plant of its kind Intel has built in 15 years. "China is a our fastest-growing market and we believe it's critical that we invest in markets that will provide future growth to better serve our customers," Intel's Otellini said at a March 26 press conference in Beijing announcing the $2.5 billion plant. But that's not the whole story behind Intel's move, McGregor says. "Why now and why China? The bigger picture is that it's just not a play for China market share, but also is of political importance to Intel," McGregor says. The political clout Intel hopes to gain is to prevent the Chinese government from setting technology standards separate from global standards created by the chip-making industry -- such as the recent fight Intel and other industry leaders had to keep China from create separate broadband standards, McGregor says. "Our industry does much better when we adopt our own (global) standards rather than governments," he says. "It's a `pull strategy' (by Intel) because now China is a stakeholder in the outcome." Still, two hurdles will remain for the plant: licensing approval by the U.S. government at a time when China is becoming a hot-button political issue, and protecting intellectual property in a nation with a reputation for high-tech piracy. "But this is all a natural progression as a market develops," he says. "We saw it in Japan and Korea before, and now we're seeing it in China." SPECIAL REPORT |