United States chip-maker Intel is planning to invest about US$200 million in its Shanghai-based flash-memory assembly and test facility over the next few years so it can build computer peripherals at the site. Intel vice-president James Jarrett said yesterday the planned expansion would require at least doubling the company's investment at the facility from the present US$198 million. Timing of the investment depended on market conditions, but Mr Jarrett said the company had made its decision. Computer peripherals are companion chips to microprocessors that perform all of the support logic functions in computers. Intel's commitment to enlarging its presence in the city is certain to find favour with the local Shanghai government, which has earmarked 150 billion yuan (about HK$140 billion) to promote its electronic information businesses over the next five years. Critical to those efforts are government plans to build a number of silicon semiconductor foundries in the city's Pudong New Area. Intel president Craig Barrett said US export controls would probably prevent the chip-maker from building its own semiconductor production facility in the mainland. He said Intel would be interested only in building a state-of-the-art factory running 12-inch wafers and .13-micron technology or less. 'Our product line really requires the latest in technology,' he said. But he added that the company was continuing to 'keep our eyes open'. Mr Barrett went on to say that China's bid to construct an integrated circuit industry would depend on its ability not only to make the chips but also deliver them to the marketplace in high-level manufactured electronic products. He attributed the success of Japan and the United States in developing their integrated-circuit industries to their strong positions in consumer electronics and computers, respectively. 'China has lacked that distribution channel in the form of some electronic goods that they can distribute around the globe,' he said. Mr Barrett was in Shanghai to discuss strategies for developing electronic business. He characterised the e-business possibilities in the mainland as enormous. Citing International Data Corp statistics, the Intel chief said online sales in the mainland were expected to grow from US$8.1 million in 1999 to US$3.8 billion by 2004. Online users over the same period were expected to grow to 50 million from the present 10 to 15 million accounts. That would make China the third-largest online market in the Asia-Pacific region, he said, and domestic growth in turn would provide fresh demand for new services from communications to commerce. Nevertheless, Mr Barrett said China's online economic transactions were 'low and immature'. Moreover, the kind of hyperactivity that characterised Internet development in North America and Europe was not expected to arrive in the mainland for another six or seven years. China's entry into the World Trade Organisation made it imperative the country moved this forecast forward by several years, he said. That meant the government needed to build out its telecommunications infrastructure, including telephone lines and high-density bandwidth, while lowering access charges and educating young people about the Internet.