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Intel has announced plans to build a $2.5 billion (£1.28 billion) chip-making plant in the north-east of China.

The microprocessor giant aims to complete the 300mm wafer factory, known as Fab 68, in Lianoning province's Dalian by 2010.

The facility will be Intel's first wafer fab in Asia and adds to the group's existing chip manufacturing plants in Shanghai.

Intel president and chief executive officer Paul Otellini said that the plans were evidence of the fact that China was the group's "fastest-growing major market", adding that he believed it was "critical that we invest in markets that will provide for future growth to better serve our customers".

"Intel has been involved in China for more than 22 years and over that time we've invested in excess of $1.3 billion (£0.66 billion) in assembly test facilities and research and development, he explained.

"This new investment will bring our total to just under $4 billion (£2 billion), making Intel one of the largest foreign investors in China."

The vice chairman of China's national development and reform commission, Zhang Xiaoqiang, commented that Intel's investment would have a "positive impact to the regional economic development… in the old industrial base of north-east China".

"We support Intel's initiative to expand and strengthen cooperation with relevant parties in a number of areas, such as talent training, technology standards, improved information technology for rural areas and digital health, to promote the mutual benefit and win-win of Intel and the information industry of China, and to achieve the goal of growing together," he went on to say.

Intel says the 300mm wafers allow semiconductors to be produced at a lower cost, as well as using 40 per cent less energy and water than a 200mm wafer factory.