Intel's CEO should receive a medal as big as a frying pan
By Neill Newton
CEO Paul Otellini’s announcement, that Intel would invest US$2.5 billion building a plant in Dalian (Liaoning Province in China’s Northeast) capable of producing 300-millimetre (12-inch) integrated wafers was simply stunning! Even more interesting, it is the largest investment outside of the United States. However, the most exciting part is that once completed, Dalian will become Asia's largest IC chip production base. ChinaFIG takes its hat off to Mr. Otellini in leading his firm’s Board in this direction. In fact, when the medals are handed out, his (and Chairman Craig Barrett’s) should be as big as a frying pan!
The Dalian Municipal Government and Intel signed the contract on March 27 2007 for the establishment of the plant and this has generated global interest. Over the last 22 years, Intel invested some USD $1.3 billion in chip packaging, testing and research projects in Chengdu and Shanghai. Now, here’s its first plant … and what a watershed for China’s Northeast for their Board to make this decision!
Turbo charging China’s IT
The new leviathan four-square-kilometer plant will be situated in Dalian’s Economic and Technological Development Zone. Construction will begin later this year and when fully operational in mid-2010, will be capable of producing 52,000 integrated wafers per month with a potential annual output estimate reaching 20 billion Yuan.
Zhang Xiaoqiang, Vice Chairman of the National Development and Reform Commission, stated; "This new investment makes Intel one of the largest US investors in China!” He further expounded that Intel’s advanced manufacturing project will have a positive influence on the development of China's IT industry, and will enhance China's position in the global high-tech industry by improving human resources, infrastructure and supply.
Mr. Otellini reinforced that the plant will promote China's position in Intel's strategy and global IT industry. He stated; "We would likely put into production the most advanced technology available under our licensing policy from the US government at the time!"
Why the Northeast and Dalian?
Though Intel has plants in Israel and Ireland, why choose Dalian? Otellini stated; "China is Intel's fastest growing market. By increasing investment in China we will be able to better serve our customers. Dalian is an ideal site because of its geographical advantages, sound infrastructure and abundant human resources!"
Analysts believe that Intel's huge investment in the Northeast demonstrates its own strategic needs. China has become the world's second largest IT market and growing. Intel has responded with fervor and foresight, although, three years has elapsed since it searched quietly for the most favorable location. In fact, more than 20 cities worldwide were researched. But Dalian's efficiency, urban environment, ever-improving investment environment and standardized regulations won the day, even though Intel asked more than 1000 questions and required very detailed answers with statistics and specific evidence, in a tight time-frame.
In 2006, Dalian and Intel also cooperated and invested USD $30 million in establishing a large international school, meant to provide high-quality education Intel employees’ children. Dalian also hired an internationally renowned medical facilities management company to provide medical care to Intel staff.
Pied Piper Effect
With such a large endorsement for the Northeast by the Intel giant, the world has taken notice. Intel has in fact, become a Pied Piper for the Corporate IT Industry, where willing and enthusiastic firms follow Intel’s lead … but unlike the original Piper story, Intel leads them to success!
Before Intel made its plan formal, dozens of manufacturers, Intel support and service providers were jockeying for position for the big Dalian race. Many foreign firms have now already established.
Mayor Xia Deren stated; "Intel's arrival has driven a large number of enterprises related to the chip manufacturing industry to invest in Dalian. Intel's project has attracted more investment in silicon IC designing, manufacturing, packaging and testing, and follow-up projects." He also said; "A dozen multinational corporations are actively communicating with Dalian. This will promote the growth of the city and the revitalization of the old industrial bases in northeast China." Estimates of foreign investment to support the industry will reach USD $5 to $10 billion in the next five years.
Northeast China … the Rocket Ride in Technology Education
Microprocessor performances is doubling every 18 months. This requires substantial human resource development and professional development. Intel, Dalian city government and the Dalian University of Technology are braced to establish a semiconductor technology college at a cost of 348 million Yuan. Undergirding this, Intel will donate an 8-inch wafer production line with a total value of $36 million.
Because China lacks serious IC expertise, the Dalian University of Technology is planning strategically by undertaking the transferring of students in related majors to an IC major, thereby ensuring adequate human resources for Intel's plant. Also planned are for the graduates of relevant majors in secondary and vocational schools to join Intel as blue-collar workers.
Once upon a time, the whole world looked to Silicon Valley. Now, China’s Northeast city of Dalian in Liaoning Province is fast becoming the new utopia of technology, innovation and IT!Neill Newton
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