After Chinese media reported Intel's (INTC) plans in Dalian two weeks ago, the global chip maker has today finally issued a formal announcement for its plans to build a 300-millimeter wafer fabrication facility in the coastal city.

The US$2.5 billion investment for the factory designated Fab 68 will become Intel's first wafer fabrication facility in Asia.

"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," said Intel President and CEO Paul Otellini. "Fab 68 will be our first new wafer fab at a new site in 15 years. Intel has been involved in China for more than 22 years and over that time we've invested in excess of $1.3 billion in assembly test facilities and research and development. This new investment will bring our total to just under $4 billion, making Intel one of the largest foreign investors in China."

Not since 1992 with the construction of Fab 10 in Ireland has Intel built a fabrication facility from the ground up at a brand new site. Construction on Fab 68 is scheduled to begin later this year with production projected to begin in the first half of 2010. Initial production will be dedicated to chipsets to support Intel's core microprocessor business. When completed, Fab 68 will become part of Intel's manufacturing network that includes eight 300mm factories in 2010 with other fabrication facilities located in the United States, Ireland and Israel.

Manufacturing with 300mm wafers dramatically increases the ability to produce semiconductors at a lower cost compared with more commonly used 200mm wafers. The bigger wafers lower production cost per chip while diminishing overall use of resources. Using 300mm manufacturing technology consumes 40% less energy and water per chip than a 200mm wafer factory.