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The
U.S. firm said it would convert a facility in Dalian, its first
plant in China, for memory chip production. It didn't disclose a
time period for the investment, but said it will start making
advanced memory chips that can store data without using up
power, called 3D NAND chips, in second-half 2016.
The move follows a flurry of deals in the global semiconductor
industry, highlighting growing importance of the memory chips
used to store data in increasingly popular mobile devices.
Researcher TrendForce predicts China will consume $6.67 billion
worth of NAND chips this year, or 29 percent of global NAND
industry revenue.
Building a chip industry of its own has been deemed of strategic
importance by China in its drive to modernize its economy.
Intel's new investment follows a deal last year to buy 20
percent stake of two mobile chipmakers owned by state-backed
Tsinghua Holdings Co Ltd [TSHUAA.UL].
For its part Tsinghua recently announced a plan to buy a 15
percent stake in U.S. data storage company Western Digital Corp
for $3.8 billion.
In separate deals, Western Digital is also in advanced talks to
acquire U.S. memory chipmaker SanDisk Corp, while Tsinghua is
also trying to acquire Micron, though this deal is facing
regulatory scrutiny.
Intel's latest move raises concerns that new memory supply from
the chipmaker could undercut margins for leading industry
players like South Korea's Samsung Electronics Co Ltd and SK
Hynix Inx, and Japan's Toshiba Corp.
Analysts have said that healthy profits for the industry in
recent quarters come partly due to careful capacity management
among the dominant players.
Shares of SK Hynix fell 5.7 percent on Wednesday on concerns
about the firm's outlook. The South Korean firm is due to report
third-quarter earnings on Thursday.
"SK Hynix needs to boost competitiveness for its NAND business
but these issues are creating problems for the company," said
Hana Financial Investment analyst Rokho Kim.
(Reporting by Se Young Lee in SEOUL and Shivam Srivastava in
BENGALURU; Editing by Anupama Dwivedi and Kenneth Maxwell)
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