Intel will infuse up to US$100 million in its Philippines operations this year to make the country its largest test and assembly site for processors and flash memory chips. Analysts say this is a move that further diversifies the semiconductor giant's manufacturing investment in Asia. That commitment follows Intel's plan last year to spend US$302 million in China to expand its assembly and testing facility for chipsets and flash memory products in Shanghai. Dorothy Lai, Asia-Pacific semiconductor market analyst for Gartner, said: 'Intel is bolstering the argument for increased semiconductor investments in Asian markets outside of China. Semiconductor manufacturing firms should not put all their eggs in one basket. There are other attractive sites for investments in the region, especially some of these developing markets in Southeast Asia which offer government-backed incentives, as well as a skilled workforce.' Taiwan has the world's largest chip foundry industry. The mainland has seen a recent increase in semiconductor manufacturing-related spending as major investors try to establish foothold in a vast domestic market and explore new opportunities from China's admission into the World Trade Organisation. Intel's Asian network of test and assembly operations include China, the Philippines and Malaysia. The company's new investment programme for the Philippines, its first capital expenditure announcement this year, follows a commitment made by chief executive Craig Barrett last August that the country would play a key role in supporting worldwide demand for chips based on Intel's 0.13-micron process technology through the company's large testing and assembly operation there. The 0.13-micron technology produces the fastest transistor available, which is the foundation for the world's fastest microprocessors, Intel's recently introduced 2.2-gigahertz Pentium 4 chip. With this technology, it is possible to build circuits so small that 55 million transistors can be placed on each chip. It would take almost 1,000 of these 'wires' placed side-by-side to equal the width of a human hair. Mr Barrett said more than 40 Intel Philippines engineers were part of the international team that developed the 0.13-micron process technology. Intel has earmarked capital spending of US$5.5 billion this year, down from US$7.3 billion last year. Intel made significant investments in 0.13-micron capacity as well as its 300 millimetre silicon wafer capacity last year. Intel's 300mm technology delivers more than double the die output per wafer, allowing the company to expand capacity with greater capital efficiency and lower manufacturing costs over the next few years. Chit Ventura, spokeswoman for Intel's Asia-Pacific manufacturing operations, said the Philippines investment strategy this year consolidated all test and assembly work in the company's 25-hectare site in Cavite, 60km south of Manila. 'This move will ensure the Philippines plant will be its largest test and assembly site worldwide, as well as one of its lowest-cost operations,' she said. The fresh funding this year will push Intel's total investment in the Philippines, where it has been operating since 1974, to US$1.3 billion. Intel has put a substantial part of its back-end and engineering processes in the country, where it employs about 6,000 staff. Ms Ventura said the investment plan for the Philippines would be largely used to support Intel's increased shipments of Pentium 4 chips. The Philippines is also Intel's largest producer of mobile Pentium III processor-M products. Its annual output, which Intel officials did not disclose, is exported worldwide. In Shanghai, Intel has been operating since 1998 when it initially invested about US$198 million. The company's main microprocessor production base is in the United States.