Intel, the world's top chipmaker, plans to invest in a major new plant in China to make leading-edge chips, its biggest investment in the country to date, two sources with knowledge of the plan said.
The plant will make 65-nanometre multi-core processors, said the sources, who asked not to be identified.
This would make it Intel's first such manufacturing facility in Asia.
Intel, which has invested about $1 billion (€774 million) in China to date, already has major test and assembly plants in Shanghai and the interior city of Chengdu.
One source said the investment in the new plant would total a "couple of billion" dollars.
Both sources declined to give further details of the project, such as the location and timing, although one said the investment could be announced in the coming months.
Chip sophistication is measured by how small individual circuits are, with 65-nanometre considered one of the most advanced technologies in mass production today. An Intel spokesman in Asia had no comment yesterday.
Intel is in the midst of a major overhaul, including price and job cuts and new product roll-outs, as it works to stave off recent advances by rival chipmaker AMD, which has gained market share in the last few years.
Intel, which entered the China market in 1985, has over 6,000 employees working on assembly, testing, research and development and sales and marketing in 16 cities there, according to the company's website.
Until now, most foreign chipmakers have used China for lower-technology test and assembly work, with few doing more sophisticated production in the market.
Intel said last month it would make China an independent sales and marketing region from the beginning of 2007, underlining the country's growing importance as the company's second-largest consumer market after the United States.
Meanwhile AMD has warned that fourth-quarter revenue will fall short of analysts' estimates and operating earnings will be substantially lower than in the third quarter, citing lower average prices for its chips.
AMD said that it now expected revenue in the fourth quarter to rise about 3 per cent from the third quarter, implying revenue of about $1.37 billion.
In mid-October, Wall Street analysts, on average, had projected fourth-quarter sales of $1.44 billion, in forecasts that excluded revenue from graphics chipmaker ATI, which AMD acquired later the same month.
It said fourth-quarter operating income, excluding acquisition-related charges and certain results from the purchase of ATI, "is expected to be positive but substantially lower than in the third quarter".
Both AMD and Intel have moved to chips that are known as "dual core", meaning they effectively have two processing engines per chip, compared with one historically.
The newer designs are more powerful than older ones, yet consume far less power and are more energy-efficient.
