Chipzilla is expected to invest $3.5 billion over three to five years in the cunning plan and may end up spending $5.5 billion on the plant in Dalian China.
The factory at Dalian, opened in 2010 and was kept at least two generations behind production processes at its other factories. Now the plant will become a “leading-edge” maker of nonvolatile memory chips.
Intel has relied on a joint venture with Micron to manufacture flash memory chips, which Intel sells in its solid-state drives and other storage devices.
Both joined rivals in offering a new version of that technology called 3D NAND, which replaces a single layer of cells for storing data with multiple layers to boost storage capacity. It is expected that the Dalian plant is expected to begin producing such chips in the second half of 2016.
Also expected to created at the plant is memory using 3D XPoint that they said is much faster than conventional flash memory.
Writing in his blog Rob Crooke, senior vice president in charge of nonvolatile memory at Intel, said Intel will continue to work with Micron, but Intel wanted to have an additional source of supply of flash memory..
“The expansion is part of our global multisource supply strategy and will allow us to best serve our customers,” Mr. Crooke said.
Micron is considering using the Intel factory in Dalian as another potential future component supplier for storage devices the company sells in addition to chips.
The Chinese government backed Tsinghua Unigroup tried to buy Micron for $23 billion, but the deal fell through because of the dim prospect of gaining US regulatory approval.