Intel has set up a software and hardware focused research and development subsidiary in China, the chip giant said today.

The operation, formally named Asia-Pacific R&D Ltd., will concentrate on products that span Intel's platform-centric business units and target markets around the globe as well as a China itself.

Located in Shanghai's Zizhu Science Park, the company will take on 1,000 staff by the end of 2006, the chip giant said, many taken from what it described as "the growing pool of technical talent in China" and its growing cadre of "highly trained researchers and technologists".

That might sound like Intel is trying to butter up the locals, but it cuts both ways. The company was last year instrumental in persuading China to ditch plans to impose its own wireless networking security standard, WAPI (Wireless LAN Authentication and Privacy Infrastructure), on the country's IT industry. Intel threatened to stop selling Centrino chips to Chinese PC companies, and the government back-tracked.

China is already becoming one of the world's biggest technology markets - if it hasn't achieved supremacy already. Intel has had its eye on the region for some time. In March this year, it announced work had commenced on the company's second chip testing and assembly plant in the region, at Chengdu, Sichuan Province.

In June, it said it was pumping an extra $200m into Intel Capital's China Technology Fund, part of a plan to "stimulate local technological innovation and the continued growth of China's IT industry", CEO Paul Otellini said at the time. Intel Capital is the chip giant's venture capital wing.

Intel said it has invested almost $1.3bn in China to date. ®