Intel unveils additional investment in China to boost local supply chain

U.S. chip giant Intel on Monday announced the expansion of its packaging and testing base in southwestern China to boost local supply chain efficiency and better serve Chinese clients.

With a capital increase of 300 million U.S. dollars, the added capacity at its base in Chengdu, Sichuan Province, will primarily focus on packaging and testing services for server chips to meet Chinese clients' demand for customized packaging solutions. A new customer solutions center will also be established to enhance the efficiency of the local supply chain and increase support for Chinese customers, the company said in an announcement.

China's persistent pursuit of high-quality development and high-level opening-up serves as the foundation and driving force for Intel's long-term development in the Chinese market. Intel's strategy of being rooted in China and serving its customers remains unchanged, according to Wang Rui, senior vice president and chairman of Intel China.

The Chengdu base, put into operation in 2003, is one of Intel's largest chip packaging and testing centers globally.

Amidst the challenging global economic recovery, preserving the resilience and stability of global industrial and supply chains is crucial for fostering growth.

Intel has been under considerable revenue pressure in the global market in recent years. Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, said Intel aspires to leverage the growth of the Chinese market to overcome business challenges and enhance its overall performance.

Intel has been in China for nearly four decades, establishing its first representative office in Beijing in 1985. China has become the regional market where Intel has the largest investment and the most comprehensive organization outside the United States. Nearly a quarter of Intel's global revenue of over 50 billion U.S. dollars comes from the Chinese market.

The fresh move once again demonstrates the importance of the Chinese market to global chip players. Last year, executives of several chip giants visited China, seeking closer collaboration with the world's largest semiconductor market. Intel CEO Pat Gelsinger, when visiting China in April 2023, said China plays an incredibly important role in Intel's business strategy.

While Washington in recent years has continuously imposed semiconductor trade restrictions on China and even attempted to cut off U.S. capital flow to the Chinese high-tech sectors, U.S. chipmakers have found it both impossible and unbearable to "decouple" from the world's second largest economy. A 2021 report by the U.S. Semiconductor Industry Association clearly stated that "access to this massive (Chinese) market is essential to the success of any globally competitive chip firm today and in the future."

"China's steady economic fundamentals, coupled with the continuous improvement of its business environment, have helped bolster the confidence of foreign enterprises, including Intel, in their pursuit of growth in the country," said Bai.

A total of 42,108 new foreign-invested firms were established in China in the first nine months of 2024, up 11.4 percent year on year, according to the Ministry of Commerce.