Approved by the National Development and Reform Commission (NDRC), the world's largest computer chip manufacturer, Intel will build a wafer fabrication plant in Northeast China's Dalian City.

The production facility, with a designed monthly capacity of 52,000 wafers, semiconductors on which numerous integrated circuits are manufactured, will cost US$2.5 billion, an NDRC source said.

Intel currently operates wafer packaging and test facilities in Shanghai and Chengdu.

Industry observers said the Dalian project would help slash Intel's production costs for wafers, as labor and raw materials are much cheaper in China.

The news has also been welcomed by OEMs (original equipment manufacturers), who will have their costs cut as well.

According to a US-based market research firm, iSuppli, the sales volume of China's wafer market was estimated at US$37 billion in 2006.

The sales volume is forecast to increase to approximately US$45 billion in 2007.

(Xinhua News Agency March 16, 2007)