BEIJING - THE world's largest microchip maker Intel Corp said Saturday it had started building a US$2.5 billion (S$3.8 billion) factory in the northeast Chinese city of Dalian.

The new plant, dubbed 'Fab 68', is due to begin production in 2010 and will be the company's first computer chip factory in Asia.

Chairman Craig Barrett said the plant would cover 160,000 square metres and allow Intel to 'promote the semiconductor manufacturing industry in China', the Xinhua news agency reported.

Dalian's mayor Xia Deren welcomed the move, saying it would provide a 'push for the development of China's northeast, a former heavy industry base'. The factory takes Intel's total investment in China to US$4 billion.

The company already operates two assembly plants as well as research and development centres in the country. -- AFP