HP, the world's leading computer-maker, said in a statement that it had signed a memorandum of understanding with Chongqing municipality to build a factory in Chongqing in Sichuan province.

HP said the plant is expected to begin production in 2010 and would target customers in Chongqing 'as well as other parts of China across government, public and retail sectors'. Financial terms of the deal were not disclosed.

HP opened its first office in China in 1981 and bills itself as the leading foreign manufacturer of personal computers in the country. It already has manufacturing operations in Shanghai.

HP quoted the mayor of Chongqing Municipality, Mr Wang Hongju, as welcoming the opening of the HP factory in the fast-growing region.

'Our vision of transforming Chongqing into China's West IT (information technology) centre requires strong participation from the world's most innovative and respected companies,' he said.

HP's move comes less than a month after it announced it will cut 24,600 jobs worldwide over the next three years as part of its integration with Texas-based computer services firm Electronic Data Systems.

The northern California-based HP reported revenue for the last fiscal year of US$104.3 billion (S$153.8 billion) and has 320,000 employees following the integration with EDS. It operates in more than 170 countries.

HP's share price was up 1.75 per cent in New York to US$40.70 dollars shortly after the China announcement. -- AFP