Intel plans to invest $300 million to expand its chip packaging and testing base in Chengdu, China.
According to a report from the South China Morning Post, the investment will allow the struggling chip company to increase packaging and testing capacity for server chips and establish a customer solutions center at the facility.
The announcement was made by Intel’s local Chinese entity, Intel Products, in a WeChat post, adding that the customer solutions center “would improve the efficiency of the local supply chain, increase support for Chinese customers, and improve response time.”
Intel launched its Chengdu plant in 2003 and despite the ongoing trade war between China and the US, China remains Intel’s largest market, accounting for 27 percent of the company’s total 2023 revenues, compared to the US which made up 26 percent.
However, in April 2024, the Chinese government ordered its telecommunications providers to remove foreign chips, such as those made by companies including Intel and AMD, from its networks in favor of domestic-made replacements.
The investment announcement comes at a turbulent time for the chipmaker which has been attempting to reverse its poor financial outlook after it posted a $1.6 billion loss in Q2 2024. Immediately after the results were released, Intel announced it would be making 15,000 layoffs across the company as part of a plan to save $10 billion.
In September, CEO Pat Gelsinger told staff the company was pausing plans for new chip factories in Germany and Poland, in addition to delaying the opening of a new chip packaging plant in Malaysia. Intel’s US-based fabs in Arizona, Oregon, New Mexico, and Ohio are unaffected by the changes.