Intel to invest $100 million for R&D expansion in India

Intel Corp. plans a major expansion of its research and development efforts in India and will increase the number of employees it has here from the current 1,000 to about 3,000 over the next few years, Chief Executive Officer Craig Barrett said here Friday. The investment required for this expansion would be about US$100 million, Barrett added.

“These plans are contingent on some form of economic recovery in the hi-tech industry,” Barrett said at a media briefing here on the last leg of his tour of Asia.

Most of the new hires will be for Intel’s development centre in Bangalore.

“We are including activities in India going forward which are not just software support or software creation but also including increasingly hardware design,” Barrett said. Intel is setting up a chip design facility in India within Intel’s development centre in Bangalore which will work on Intel’s 32-bit IA (Intel Architecture) processor design and development for enterprise applications.

Intel currently employs about 900 developers at its centre in Bangalore. The announcement by Barrett that Intel is beefing up engineering resources in India, after an announcement in July that it was trimming its workforce worldwide by 4,000 people in the second half of 2002, suggests that the company is shifting some of its R&D from the U.S. to India which is a lower cost location, according to analysts. Intel also announced in July that R&D spending for 2002, excluding in-process R&D, is expected to be approximately $4 billion, lower than the previous expectation of $4.1 billion.

Intel’s India Development Centre in Bangalore has emerged as a design hub for Intel’s new business offering ASIC (application-specific integrated circuit) design services to customers, according to Manni Kantipudi, director and site manager of the centre. Intel announced in September last year that it was setting up a new fabless ASIC business, called Intel Microelectronics Services (IMS), focused on the design of networking and communications chips for customers.

The India Development Centre is also working with Intel’s other business groups such as the networking and communications group and the microprocessor group. Software & Silicon Systems (I) Pvt. Ltd., an Intel company in Bangalore, has designed some of Intel’s new network chips, including the IXE2424, a network switch on a chip.

The India Development Centre is also working on Intel’s internal information systems including supply chain applications, sales and marketing applications, finance and enterprise services, and enterprise business computing.

Like other multinational semiconductor companies that have integrated circuit design or software development centres in India, Intel too has shied away from investing in chip fabrication in the country.

“There is no thinking on setting up of any manufacturing facility in India at least at the moment,” Barrett said.

Although Intel will continue to invest in countries it had earlier identified as “hotbeds of activity”, and where it has either manufacturing or design or both, such as Israel, India, and Ireland, Intel expects to make large investments in Russia and China as well.

“I should point out that Russia and China are equal candidates for our investment going forward, and probably will see the greatest percentage growth in our investments,” Barrett said. “China from a combination of engineering and manufacturing, and Russia primarily from an engineering standpoint.”

Other Intel sites in Malaysia, the Philippines, Costa Rica and the U.S. will however continue to play a significant role in Intel’s growth, Barrett added.

During his visit earlier this week to Penang in Malaysia, where Intel has manufacturing and design facilities, Barrett announced Tuesday that Intel was setting up an operations service centre there. The centre is expected to provide support services for the company’s internal communication and computing systems.

Vietnam was also on Barrett’s itinerary for his Asian tour, although Intel does not have either design or manufacturing in the country. Addressing students Wednesday at an university in Hanoi, Barrett said that all citizens have the right to access information on the Internet. These remarks come in the wake of new restrictions by the Vietnam government on Internet access.