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Intel has announced plans to build a $2.5bn wafer fabrication plant in China.

In what is seen by many as a politically significant shift in strategy towards high-tech exports, the move into the growing Chinese market looks set to ruffle some feathers in Washington.

The plant is the first of its kind in Asia and will be located on the coastal city of Dalian with up to 1,500 workers expected at the site.

Intel is said to have gained a US export licence to manufacture older technology chipsets with circuit widths of 90 nanometres, despite some political opposition.

US rules normally restrict the export of technology that has potential military capabilities.

Speaking about the new wafer fabrication plant, technology analyst Rob Enderle told the Financial Times: "You've got to assume what they put in there will probably not be 90nm. That is just to get them started. What they will end up building will be more advanced."

Intel already makes 65nm processors and is expected to reduce sizes to as little as 32nm by the time the Dalian plant begins production in the first half of 2010.

Negotiations between Chinese officials and the world's largest semiconductor maker took several years before the plant was formally given the go ahead in February this year.

An announcement confirming the deal was made at a news conference in Beijing last night. ®

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