Posted on 08/07/2002 7:25:09 AM PDT by JameRetief
Intel to start fab plant in China
Compelling reasons to shift
By : Wednesday 07 August 2002, 11:10
And the firm is also planning on boosting its presence in Malaysia and another unnamed Asian country, we have learned.
Intel already has a Chinese research centre in Beijing, to which it is actively recruiting staff, and a flash memory factory in Shanghai. But a fab in mainland China has obvious advantages. It would give Intel direct access to distribution channels, avoid punishing tariffs, and of course, labour costs would be much reduced.
The Chinese government also has an active policy of favouring locally based firms, and its own ambitious project to develop CPUs.
More importantly, and as we've reported here before, the majority of Intel's revenues come from outside its home territory, and analysts predict the vast majority of semiconductor growth in the next five to 10 years will be in the Chinese marketplace.
Local engineering expertise and infrastructure is also much improved in mainland China, and there's a steady brain drain of designers from Taiwan, too.
The Beijing research centre already has an ambitious programme for software development, as you can see by clicking on this Intel page.
But an Intel fab on the mainland is likely to be built near the Shanghai area, which is already a hotbed of semiconductor development. µ
See Also
Intel eyes China through the gathering gloom
Mainland China set to rule the semi world
Chinese boffins have 150MHz Windows chip
China takes on CPU design
To build a "fab", it costs something like $3 Billion (see forbes for reference). Not exactly a small investment.
The stupidity of this is appalling!
The Damn Bean Counters are so freaking worried about their bottom line they would sell anything or do anything to improve their short term profits. What they ignore is that in the long run they will have NO profits, because the PRC will use the technology to undercut them in their own fields.
(Rant mode Off)
Doubtful. The real work (and the real money) in these things goes into the design of them, not the actual manufacture. Unless and until the Chinese can design their own chips that run faster and cheaper, they're no threat at all to Intel.
McGee's love, AMD has two major fabs, one in Austin which is being converted to Flash ONLY, and their fab in Dresden Germany which is the only AMD fab building their Athlon processor.
The point is McGee isn't bothered by AMD producing parts overseas but somehow the posibility that someday (and again I have no knowledge) Intel may build a chipset (ie low technology) fab in China, this bothers him greatly.
BTW, I am a stockholder of both AMD and Intel.
but given the huge market, an investment that might be in intel's best interest to make.
i have worked with the chinese before. your analysis is correct. they can do things cheaper, and what they can do they do well. they are simply limited in what they can do, both technologically and culturally.
i do not think bush had a direct or indirect hand in setting up an intel plant in china.
the best way to undermine communism is through capitalism. there is developing a business culture along the east coast of china that is beginning to see the error in its leaders' ways. the more these folks interract with the west, the sooner western thought will permeate their society and the better off we will all be.
There might be something to that statement. The Chinese can't afford the good stuff, especially on a mass scale.
Margins in China are extremely tight. Some tech companies are going into cooperation with each other in China to drive costs down. Thats unheard of.
The Chinese market is extremely price sensitive. At the same time the government (where all these techies sell their stuff) is willing to spend lots...however they want 10 chips for the price of what we would pay for 4 of them...
There has to be a happy medium there somewhere. That medium is "4 year old tech"...sold to ensure a profit. They are going to have to sell things as commodity items.
The government of China is about to turn its attention from cel phones to internet infrastructure... and they want bang for their buck.
If they pour 4 or 5 billion into China in upfront costs, it will take them years to recoup that...maybe never...
If they are planning on using old, but tried already, tech, and go in with low overhead, and aim for a low cost producer... then you might be safe. Maybe.
Also check on the number of entrants into the China sector too. Competition is going to be mad and pricing done on price war footing.
Thats how the CCP likes it.
As time passed, the Chinese figured things out. Last few years Motorola has been losing ground in China. The CCP "figured out" that they were being overcharged when Motorola posted returns...
That was viewed as 'screwing the Chinese'...
Now there are several competitive companies in China, and few make big money.
As for the internet, China has gone through the routine once, and the window of big profits that Motorola had at first won't really happen.
Check out posts 11, 12, and 13.
The way this sounds, if its true, (and based on my previous experience), that Intel is going to use Malaysia and the 'other country' as its export platform.
China may well be bypassed on that game. And for good reason.
From another thread...
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In 1979, China set a radical new course when Deng Xiaoping, the successor to Mao, effectively began to dismantle doctrinaire communism by declaring that "it matters not if a cat is black or white, so long as it catches mice" --
With that statement has China ever abandoned its strategic goals for ultimate super power and power over Asia? What is the "mouse" they are after?
China did not abandon its goal of a utopic China, they just tried a different method of getting there.
The only way they can do what they so desire... is to oppose the US.
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Investing in China makes rich dictators.
i suggest you wake up and smell the coffee and open your windows and doors. there is an exciting world of folks out there, many who hate us, but many more who aspire to be like us.
I posted the article because it has to do with a US corporation's dealing with the Chinese. As McGee points out, there are many tech corporations with production facilities in China, and he didn't disparage any of them for it. Why you think this is a hit piece on Intel is beyond me, but whatever floats your boat.
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