Intel is planing to invest in China memory chip plant

The U.S. firm said it’d convert a facility in Dalian, its first plant in China, for memory chip production. It didn’t divulge a time period but said it will start making complex memory chips that can save data without using up power, called 3D NAND chips, in second half 2016.

The move follows a flurry of deals in the global semiconductor industry, highlighting growing significance of the memory chips used to save data in cellular devices that are increasingly popular. Research Worker TrendForce calls China will use up $6.67 billion worth of NAND chips this year, or 29 percent of worldwide NAND industry revenue.

Building a processor industry of its own is deemed of strategic relevance by China in its drive to modernize its market.

For its part Tsinghua lately declared a plan to purchase a 15 percent position in U.S. data storage firm Western Digital Corp for $3.8 billion.

Intel’s latest move heightens concerns that new memory supply from the chipmaker could undercut margins for Japan’s Toshiba Corp., and leading industry players and SK Hynix Inx

Analysts have said that strong profits for the business in recent quarters come partially due to careful capacity management among the dominant players.

Shares of SK Hynix fell 5.7 percent on Wednesday on concerns about the business’s prognosis. The South Korean business is due to report third quarter earnings on Thursday.

“SK Hynix should enhance competitiveness because of its NAND business but these dilemmas are making difficulties for the company,” said Hana Financial Investment analyst Rokho Kim.