Intel will be able to control costs and keep its factories busy by moving manufacturing in-house, said Dean McCarron, principal analyst at Mercury Research.
"It makes sense because Intel likes to make manufacturing facilities in technically sophisticated markets, which China is," McCarron said.
Mobile chips alone may not fill up a facility of Chengdu's size, so Intel may make chips for mobile devices for third parties, McCarron said.
"If someone like Apple were to approach Intel and say we want this custom phone part, it's obvious Intel will build it," McCarron said.
Intel is also upgrading equipment in its factory to remain in the good books of the Chinese government, which is has been difficult on Western technology companies, said Jim McGregor, principal analyst at Tirias Research.
Companies like Microsoft and Qualcomm are being investigated by the Chinese government for monopolistic behavior.
"Intel's trying to stay out of trouble," McGregor said.
The chips made in the Chengdu factories won't be based on the latest process manufacturing technology, McGregor said, adding that Intel wants to protect its intellectual property and won't transfer its latest manufacturing process to China.
"There's a lot of leaky walls there. It's hard to keep intellectual property and patent secrets out there," McGregor said.
If Spreadtrum or Rockchip want the latest technologies, they'd have to rely on Intel factories in the U.S., which can be more expensive. That could raise the price of chips, and ultimately of mobile devices.
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