The Chinese government has given Intel permission to build a $2.5 billion chip manufacturing plant in Dalian, on China's northeastern coast.

Intel plans to build a plant that will produce semiconductors, including microprocessors, on 300-millimetre wafers using a 90-nanometre manufacturing process, China's National Development and Reform Commission (NDRC) said in an announcement (in Chinese) on its website. The plant will have a monthly production capacity of 52,000 chips, it said.

The planned plant will be the first constructed by Intel in China, and will operate along with test and assembly plants in Shanghai and Chengdu, a city in southwestern China. The NDRC announcement did not say when construction will begin on the plant, or when it would begin production.

Intel declined to comment on the NDRC announcement. "We haven't made any announcements and we don't plan to," said Chuck Mulloy, a company spokesman.

If the NDRC announcement is accurate, the Dalian plant would be a coup for the Chinese government, which has made the development of the country's semiconductor-manufacturing industry a national priority.

The most advanced production technology currently used by Intel is a 65-nanometre process, and the company has plans to begin producing chips using a 45-nanometre process later this year. The lower the number is, the smaller the size of the smallest feature that can be created on a chip.

Moving to a more advanced production process means chips can be produced at a lower cost, since more can be crammed onto a single silicon wafer. More advanced process technologies also generally help to improve performance and reduce power consumption.

While a planned plant in Dalian that uses a 90-nanometre process technology would lag several generations behind the most advanced technology used by Intel, the plant would still rank among the most sophisticated in the world.

(Ben Ames in Boston contributed to this report.)