Intel to invest $1 billion in Indian operations

By Reuters

Published: December 5, 2005, 6:38 AM PST

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Intel, the world's largest chipmaker, plans to invest more than $1 billion in India to strengthen its research and development and invest in telecommunications companies and technology start-ups, its chairman said Monday.

California-based Intel has a development center in Indian technology hub Bangalore that designs and develops software to power chips that drive computers and high-end networks for Internet-based applications.

It already has invested $700 million in Asia's third-largest economy over the past decade and has provided venture funding worth more than $100 million to 40 companies, such as computer trainer NIIT and telecommunications software firm Sasken Communication Technologies.

"We will grow our local operations, boost venture capital investments and work closely with the government, industry and educators," Chairman Craig Barrett told reporters.

Barrett, on his seventh visit to India, said $800 million would be invested over the next five years to expand research and development in Bangalore, in addition to marketing, education and community programs.

The Bangalore center, opened in 1998, has 2,800 employees.

Intel is among a long list of companies that have set up huge outsourcing operations in India, which have become the driving force of a $17.2 billion software services industry.

The chipmaker will also create a $250 million India-specific venture fund to invest in start-ups focusing on mobile communications, broadband applications and mobile commerce.

Intel's earlier Indian investments have ranged from $500,000 to $10 million. Some companies it backed, such as Rediff.com, have gone public.

India's booming technology and telecommunicationss sectors have been the flywheels of economic growth over the past three years, as overseas and domestic demand for such services has exploded.

Dozens of entrepreneurs are searching for high-quality funding, and a stock market boom has handsomely rewarded early investors.

In other news:

Barrett said Intel is in talks with the government to set up a chipmaking facility in India, but no decision has yet been reached.

Smaller rival Advanced Micro Devices has stolen a march on Intel by signing a deal with consortium SemIndia to supply technology for a proposed $3 billion chipmaking factory in the country.

Barrett said if the firm did set up a chip-fabricating unit in India, it would be wholly owned by Intel.

Indian demand for chips is seen at $30 billion a year by 2015 as low penetration levels, rising incomes and soaring aspirations fuel demand for electronic products such as televisions, mobile handsets and washing machines.

Analysts say India does not yet have a chipmaking facility due to a lack of continuous power and deficient ports and roads.

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