Intel has said that it will write a $1.6 billion cheque to upgrade its factory in the city of Chengdu in western China.
The surprise move shows how Chipzilla is deepening ties in a market that is proving increasingly troublesome for rivals like Qualcomm. It also is unlikely that Intel got the sort of sweeteners for the deal which it expects from the US and Israeli governments to set up shop.
Intel said it will receive local and regional government support for construction, but it would be less likely to be the sort long term tax perks that Intel is used to.
Intel executive vice president William Holt said in the statement. “The fully upgraded Chengdu plant will help the Chinese semiconductor industry and boost regional economic growth.”
The announcement comes three months after Intel purchased a minority stake in a government-controlled semiconductor company to jointly design and distribute mobile chips, an industry that China considers to be of strategic importance.
Intel is doing better in China than Qualcomm which is expected to announce that it is writing a huge cheque to make Chinese antitrust regulators go away.
China’s investigation into Qualcomm and Microsoft have prompted an outcry from foreign business lobbies. They say the Chinese government is increasingly adopting strong-arm tactics to yield technology-sharing or other arrangements beneficial to domestic industry.
Analysts say there is a broad recognition that foreign companies must do more to stay in China’s good graces.
Chipzilla has taken the approach that if you want the Chinese government to like you, you have to invest in the local industry.
