Intel plans to invest in a major new plant in China to make leading-edge chips in what will be its biggest investment in the country to date, sources said.
The plant will make 65-nanometre multi-core processors, the sources said. This would make it Intel's first such manufacturing facility in Asia.
The world's top chipmaker, which has invested about $1 billion in China to date, already has major test and assembly plants in Shanghai and the interior city of Chengdu.
One source said the investment in the new plant would total a "couple billion" dollars.
Intel is in the midst of a major overhaul, including price and job cuts and new product roll-outs, as it works to fight off recent advances by rival Advanced Micro Devices, which has gained market share in the past few years.
Intel, which entered the China market in 1985, has over 6,000 employees working in 16 cities there, according to the company's website.