DALIAN, Oct. 26 (Xinhua) -- U.S. computer chip giant Intel Corporation's first chip plant in Asia began production in northeast China's Liaoning Province Tuesday.
The start of operations was announced at 9:45 a.m. by Kirby Jefferson, general manager of the plant.
"This is the first fab we've built at a brand new site since 1992," said Paul Otellini, Intel's president and chief executive officer, at the commencement ceremony.
The plant has been dubbed "Fab 68," as the numbers six and eight are auspicious in Chinese culture.
"Over time, I believe that Fab 68 will be a prime example of how investment in innovation fuels economic prosperity, and not only in Dalian but in China as a whole," he said.
The 2.5-billion-U.S.-dollar plant is located in the high-tech Jinzhou New District north of the port city of Dalian. It covers an area of 163,000 square meters, roughly the same area as 23 soccer fields.
With more than 1,700 employees, 88 percent of whom are locals, it will initially produce chipsets for laptop computers, high-performance desktop PCs and powerful servers.
The factory will be Intel's eighth producing 300-millimeter integrated wafers.
It will use 65-nanometer technology, an advanced method of computer chip-making that measures its work in 65 billionths of a meter. The technology is more advanced than the 90-nanometer technology Intel had pledged when it initially announced the project.
Construction of the plant began in September 2007.
Xia Deren, Mayor of Dalian, said the project would boost Dalian's economic growth.
"The project will bring positive and obvious effect to the industrial restructuring and development of high-tech industries in Dalian," he said.
Xia's view was shared by Ping Yuan, vice head of the Jinzhou District Bureau of Foreign Trade and Economic Cooperation.
Ping noted that following the project, 24 of Intel's suppliers like Novellus Systems and the Advanced Semiconductor Material Lithography (ASML) had set up bases in Dalian. In addition, more than 80 local enterprises in Dalian became suppliers to Intel.
"In the past, not many foreigners knew Dalian. The Intel project has made the city better known," he added.
Trade frictions between China and the United States boiled over this month, when Washington postponed the release of its semi-annual international economic and exchange rate policies report to Congress, and launched a new probe targeting China's "green technology" trade policies.
However, Jefferson believed the frictions would not affect operations of the plant in Dalian. Noting that the new factory would help Intel better serve customers in Asia, he suggested that it could set an example to the development of Sino-U.S. trade ties.
Completion of the Dalian factory raised Intel's investment in China to 4.7 billion U.S. dollars.
"Establishment of the plant shows Intel's confidence in China's economic growth and information and technology industries development," said Professor Zhang Hanlin, of the University of International Business and Economics.
"On the other hand, the move will help remedy the trade relationship between China and the U.S.."
He was echoed by Dr. Mei Xinyu, an associate researcher at the International Trade and Economic Cooperation Institute of the Ministry of Commerce.
"The Dalian plant is a high-tech project with huge investment," he said. "The return period of the investment could be long. Therefore, operation of such a project shows that the United States is optimistic about the stability of the Sino-U.S. relationship."
Mei said China's labor costs were rising as a result of economic development. At the same time, thanks to the efforts of local governments, the quality of labor, infrastructure and public facilities in China was approaching or even surpassing that in developed countries.
"Low cost is no longer the major advantage in China to attract investment," he said. "The environment is improving."
According to the website of China's Ministry of Commerce, in the first nine months this year, U.S. enterprises set up 1,155 new companies in China, up 0.17 percent from the corresponding period last year.
A total of 19,209 foreign-funded companies were set up during the past nine months, up 17.5 percent. Some 74.3 billion U.S. dollars were involved, up 16.58 percent.