Intel will invest $1.6 billion to upgrade its factory in the city of Chengdu in China, as the chipmaker is deepening ties in the local market. Intel said on Thursday that the upgrade would bring its most advanced chip-testing technology to China. In exchange it will receive local and regional government support for construction.

Intel has already purchased a minority stake in a Chinese, government-controlled semiconductor company to jointly design and distribute mobile chips, an industry that China considers to be of strategic importance.

Intel's rival Qualcomm has been facing problems in China, but it is expected to announce a potentially settlement with Chinese antitrust regulators.