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CHENGDU, CHINA-Intel plans to build a $375-million plant in Western China for testing and assembling semiconductors made from silicon wafers. The plant will be located in Chengdu, the capital of Sichuan province. Construction is slated for 2004, with occupancy expected in 2005.

Intel does not yet have a wafer plant in China, so the semiconductors will be created from wafers manufactured at fabrication plants in other countries including the United States. The plant in Chengdu will be similar to one in Pudong, outside Shanghai, where Intel has spent $500 million on upgrades so the plant can prepare its most complex microprocessors. Sometime after the $200-million first phase of the Chengdu plant is up and running, Intel says a $175-million second phase will add more facilities.

Intel is taking advantage of the cheaper labor rates and proximity to its largest customer base. While the bulk of its operations are in Oregon, the Santa Clara, CA-based company generates 70% of its sales outside the United States, and China is its fastest growing market.

Earlier this week, Intel opened a product design plant in Penang, Malaysia as part of a $40-million effort to expand operations in that country as well. Next year, new construction is planned in China, India, Russia, Malaysia and the Philippines.

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