Intel Ramps Up for Pentium 4 Assembly in China

Reuters ^ | Wednesday, January 15, 2003 | Doug Young

[Willie Green]

For education and discussion only. Not for commercial use.

HONG KONG (Reuters) - Semiconductor giant Intel Corp is set to begin its first CPU assembly in China this year at a newly upgraded US$500 million plant, even as the company announced plans for a major cut in capital spending in 2003, its Asia-Pacific chief said on Wednesday.

The Shanghai plant where the assembly and testing of Pentium 4 central processing units (CPUs) will take place has undergone a US$300 million overhaul in the last few years in preparation for the shift, said Jason Chen, Intel Asia-Pacific's general manager.

"Our plan is to start test and assembly for Pentium 4 this year," Chen told Reuters in a phone interview.

"This will be our first time assembling CPUs in China...Our plan is to start later this year, and our progress is on track."

He did not say how many units would be produced initially.

The brisk investment level in China contrasts with Intel's scaled-back capital expenditure plans for 2003, which were announced on Tuesday in the United States when the company reported its fourth-quarter results.

Intel said it plans to scale back its 2003 capital spending by as much as 25 percent company-wide, to US$3.5 billion to US$3.9 billion compared with US$4.7 billion in 2002.

Chen would not comment on individual capital spending plans for Asia, saying the company does not publicly disclose its such plans for its individual regions.

He said Intel's Asia-Pacific region accounted for 38 percent of company revenues for the three months ended December 31 -- the fourth consecutive quarter the region has been Intel's best revenue generator.

FLASH MEMORY ORIGINS

The Shanghai plant where Pentium 4 assembly will take place was set up in 1996 with an initial investment of US$100 million, and originally produced flash memory units.

Intel later invested another US$100 million and upgraded to chipset production. The most recent upgrade will bring Intel's total investment in the facility to US$500 million by the end of this year, Chen said.

Elsewhere in the region, Intel has similar assembly plants in the Philippines and Malaysia.

The upgrade of its Shanghai plant to CPU assembly status reflects Intel's growing relationship with China, where its customer base has expanded rapidly in recent years.

Intel's China-based customer list is a who's who of the country's up-and-coming computer and telecom gear makers, many of which are just starting to try and expand beyond their traditional Chinese markets.

Intel's customers include two of China's top computer makers, Legend Group Ltd. and Founder Group Corp, Chen said.

In telecommunications, the company works closely with TCL, Motorola's China ventures and Zhongxing Telecom, Datang Telecom & Tech Co and privately held Huawei.

"We have a long-term in-depth relationship with the local industry, and those are just the hardware manufacturers," Chen said. "We work with the software industry as well, including about 14 Linux companies in China and system integrators."

[Willie Green]

Fundamentally, we believe that the U.S. government needs to devote more resources and put in place new programs to build wider expertise about China and to protect our industrial base from eroding as a result of our economic relations with China.

-- C. Richard D’Amato, chairman
U.S.-China Security Review Commission
(How to improve U.S.-China relations )

[PeterPrinciple]

where are the amd chips made?????

[GOP_1900AD]

Pretty soon, white boxes going for 100 - 200 dollars will be made like hot cakes in the PRC. Then, Dell, HP, IBM and Sun will be entirely out of the hardware business. Not long after that, using a combination of Linux and pirated Windows OS, they'll put these compananies' (and Microsoft's) SW biz in a world of hurt.

[Wooly]

AMD = Malaysia

[babaloo999]

I was browsing through their website last week while looking for info on something. I noticed one blurb that said they manufacture their chips in Austin. I also poked around on ebay and saw a few pictures of AMD chips that were labelled "made in Malaysia".

[SoDak]

Recently I was in ABQ and overheard a lot of people talking about Intel cutbacks there. Hate to see this.

[Eric in the Ozarks]

Not surprising. We just built a new house and we were stunned at the American brands we purchased that were made in China, including our Kohler bath tub.

[Lorenb420]

I was browsing through their website last week while looking for info on something. I noticed one blurb that said they manufacture their chips in Austin. I also poked around on ebay and saw a few pictures of AMD chips that were labelled "made in Malaysia".

The new "Hammer" (Opteron/Athlon 64) will all be made at AMD's Fab 30 is Dresden, Germany.

But those are just the wafers, the packaging is done elsewhere, probably Malaysia. From there they head to Austin for chip validation.

[Red Jones]

as we've discussed before, the Chinese currency, the yuan, is fixed at an artificially low exchange rate relative to US dollar. Their massive trade deficit with us would normally cause their currency to increase in value and ours' to decrease in value. This would cause our products to become more competitive and theirs' less competitive. But these normal market forces are shut off with currency manipulations that are fully approved of by the american regime. the people who are creating the order in the world want it this way. we've already lost a huge amount of our manufacturing. We're scheduled to lose the rest if we continue this type of a policy.

[tsomer]

I just got an AMD Box. Malaysia isn't much better, but if AMD will stay out of China, I'm theirs.

Does Motorola now manufacture in China. That's still Apple's chip, right?

[Willie Green]

Does Motorola now manufacture in China. That's still Apple's chip, right?

Yep.

Motorola to Cut 7,000 Workers, Sees $3.5 Bln Charge
Motorola Eliminating Another 9,400 Jobs (42,900 Motorola Jobs Cut Since Last Year!)
More U.S. Companies Could Follow Motorola To Communist China
Motorola to Triple China Investment Amid Slump
Motorola Eliminates Another 7,000 Jobs
Motorola cuts 4,000 more jobs
Motorola wins three China contracts
Fallout for the Bottom Line *UPS, GENERAL MOTORS, MOTOROLA DON'T WANT TO LOSE MONEY IN CHINA*
Motorola Cuts 4,000 More Jobs (Again!)
Motorola Cuts 7,000 More Jobs
Motorola To Cut Up to 4,000 Jobs
Motorola Lays off 2,500 Workers, Closes Manufacturing at One Plant
Motorola´s Huge Technology Transfer to China
The pledge of allegiance - to China? Motorola proud of strategic alliance with Beijing
Motorola To Open Design Center In China
Biggest China Boosters: Boeing, GM, Motorola

[Centurion2000]

How long until this plant gets nationalized after China and the US get belligerent with each other (of course it's going to happen, just a question of when).

Jeff Head is starting to seem like a prohpet.

[mitchbert]

How long until this plant gets nationalized

All kidding aside, if you ever hear that the Chicoms have nationalized Hutchinson-Whampoa you may wish to check on the quantity of non-perishable food stored in your house.

[Texas_Jarhead]

Prepare for the new PRC Pantium 4, that's right the Pantium 4. The great minds of glorious Red China are proud to bring you the first world class CPU designed and manufactured completely in China. We anticipate that our new CPU will be identical in performance but will cost 40% less than Intel's competing Pentium 4.

[YankeeReb]

Thank God the Chinese now have some of the most sophisticated chip manufacturing equipment in the world. Why bother with espionage when American corporations are more than willing to give you the technology for free, and even build you a manufacturing plant?

Remember what the fathers of the communist revolution always said, "Capitalists will sell us the rope we use to hang them.". Looks like that sentiment is coming to pass after the "end of the cold war"

[GOP_1900AD]

They were probably packaged (e.g. dice from the singulated wafers bonded out to lead frames and encapsulated then final tested) in Malaysia by AMDs vendor for this service. Annam (sp? - e.g. the world's largest packaging service) have substantial facilities in Malaysia.

Most US chip companies have wafer fabs in the US, Europe and various other places. I know that both Mot and ST have put fabs into the PRC, not sure about TI, National, etc. The Japanese chip makers seem to be less aggressive about putting in fabs there; mostly it's the Japanese passive electronic suppliers who have done that (although many of them also have facilities in ASEAN).

[Stand Watch Listen]

FYI...Trade Deficit...Now >$100B /yr

Economic Snapshots

Snapshot for November 20, 2002.

Surging China imports devastate U.S. industries
Trade deficits usually shrink during an economic downturn, but China's unfair trade practices have caused the U.S.-China deficit to soar despite the U.S. recession of the past two years. Between 1989 and 2001, though U.S. exports to China more than tripled, imports from China increased eightfold, causing a whopping twelvefold surge in the U.S-China trade deficit. So far this year (through September, the latest month for which data are available), the deficit has continued to grow and is projected to reach $100 billion, an all-time record.

The U.S.-China trade relationship is of growing importance to overall U.S. trade. Exports to China grew from 1.6 percent of total exports in 1989 to 2.6 percent in 2001. Imports from China now comprise 9 percent of all U.S. imports, up from 2.5 percent in 1989. China alone now accounts for more than one-fifth of the total U.S. trade deficit.

Contrary to promises by business and government leaders that increased trade would benefit workers on both sides of the Pacific, the opposite is actually occurring. China's export industries are associated with gross violations of human rights, including forced labor,¹ and even while China's economy is growing and becoming more productive, minimum wages are stagnant or decreasing in major manufacturing centers.² Meanwhile, in the U.S., growing trade deficits are resulting in closed factories and lost jobs in every industry and state. Between 1992 and 1999, growing U.S. trade deficits with China eliminated more than 683,000 jobs in the U.S. economy; EPI economists forecast the loss of an additional 872,000 U.S. jobs due to surging trade deficits with China by 2010.³

1. See U.S. Department of State. 2001. 2000 Country Reports on Human Rights Practices. Washington, DC: U.S. Department of State.
2. Legget, K. and P. Wonacott. 2002. "Burying the Competition." Far Eastern Economic Review. October 17.
3. Scott, Robert. 2000. "China and the States." EPI Briefing Paper. Washington, DC: Economic Policy Institute. http://www.epinet.org/briefingpapers/Chinastates/chinastates.html.

This week's Snapshot by Adam S. Hersh and EPI Research Co-Director

[SoDak]

With the Red Chinese able to exploit with impunity a huge base of nearly slave labor, this is not surprising.

[Red Jones]

bump