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Intel Corp. broke ground on a new US$2.5 billion [b] chip plant in the northeast city of Dalian on Saturday, with production expected to begin in 2010.

The chip plant, called Fab 68, will make chipsets, not microprocessors, when it begins production. It will use 90-nanometer process technology, not the more advanced 45 nm or 65nm processes used elsewhere.

Intel's investment in Dalian, a port city that hosted the latest session of the World Economic Forum last week, is one of the largest by a foreign corporation in northeastern China, an area that has been hit particularly hard by a transition away from heavy industry in China's economy.

Dalian itself has fared somewhat better than neighboring inland cities. The city is a technology hub, hosting some of the country's top software outsourcing firms.