Mumbai: India seems to have lost out to China in its bid to become a manufacturing hub for microprocessors. Intel Corporation, the world''s largest manufacturer of computer chips, will invest $2.5 billion to build a microchip plant in North Eastern China.

Earlier in December 2005, Intel''s chairman Craig Barret had unveiled $1-billion multi-year investment plans for research and education in India. (See: Intel outlines $1-billion multi-year investment plans)

The 300mm-wafer fabrication facility in Dalian in China will be Intel''s first semiconductor plant in Asia, chief executive Paul Otellini told reporters.

Work on the project will be kicked off in July with production of chipsets targeted to start in 2010. The investment is over and above the $1.3 billion Intel has spent on major test and assembly plants in China.

"China is our fastest-growing major market and we believe it''s critical that we invest in markets that will provide for future growth to better serve our customers," Otellini said.

Intel has a network of chip facilities spread across the United States, Ireland and Israel, The China project will be its eighth 300mm factory, the company said in a statement.

The plant will have a monthly capacity of 52,000 wafers and will use 90-nanometre technology to produce chipsets, China''s National Development and Reform Commission had said earlier this month.

Chipsets are the collection of secondary chips and interfaces that surround the main processor and will be used in desktop computers, laptops and other electronic devices. Chipsets connect a microprocessor to other system components.

The factory will supply chipsets to customers in China, which Intel expects to be the largest information technology market by the time the facility opens in 2010, Otellini said at the Great Hall of the People.

Intel has 6,000 employees in China and factories in Shanghai and the western city of Chengdu making memory chips, microprocessors and other products, according to the company''s Web site.

The Chinese government has been trying to attract such high-tech projects in hopes they will help China evolve from a low-cost manufacturing centre to a creator of profitable advanced technologies.

Intel said it chose China for its first new computer-chip factory in 15 years, to be closer to customers in a country that assembles about 50 per cent of the world''s PCs. It is the world''s biggest chip market since 2005, and is expected to be $111-billion market for microchips in 2011, up from $39 billion in 2005.

The Dalian plant raises Santa Clara, California-based Intels investments in China to almost $4 billion.

The new investment brings Intel, the worlds largest semiconductor maker, closer to chip buyers including Lenovo Group Ltd, which acquired IBM''s PC business in 2005, and Dell Inc in China.