Intel Russian investment seen as first in series

Intel Corp. has made its first investment in a Russian company and promises more such investments are to come, the company said Thursday.

Intel Capital, the company’s investment division, will invest an unspecified amount in ru-Net Holdings, based in Moscow and one of Russia’s leading IT companies. Russia has “great potential” in computing and communications and is a fast-growing market for Intel, said Christian Morales, the general manager of Intel’s Europe, Middle East and Africa operations in a statement.

Russia is “a critical market for Intel,” and the wealth of technology expertise there distinguishes the country from other emerging markets, Intel Capital Vice-President Claude Leglise said in the statement.

The first investment in Russia is targeted at enabling TopS, ru-Net’s system integrator business, to build software running on Intel chips.

Bucking the global high-tech downturn, Eastern Europe is emerging as one of the hottest markets for technology companies, with significant growth in PC and software sales, Internet use and mobile communications.

The Intel deal is an indication that foreign companies are starting to realize that Russia is a good investment, said Robert Farish, the regional manager for Russia, Ukraine and Central Asia at research firm IDC.

“The IT market here is growing very strongly and confidence in Russia is increasing,” he said.

Founded in 2000, ru-Net Holdings began as a venture capital firm with US$20.5 million in assets. That year, it acquired a majority stake in, Russia’s leading e-retailer and a significant stake in Yandex, the top Russian language search engine and Web portal. It later became an operating company in its own right and now runs an outsourcing firm and TopS.

“(ru-Net) is an established company and a safe bet for Intel’s first investment in Russia,” Farish said.

Intel plans to invest in systems integrators and software developers to boost its business in Russia and Ukraine. Intel also intends to fund companies working in new semiconductor materials, nanotechnology and wireless communications.

Earlier this year at a Moscow press conference, Intel said that sales of its products on the Russian market grew 30 per cent in 2002, with Intel Pentium 4 processors accounting for 50 per cent of the processor market. The company has 450 employees in Russia and operates a research centre in the city of Nizhny Novgorod.

In 2002, Intel Capital invested more than US$200 million in more than 100 companies worldwide, Intel said.