Intel to set up plant in India, invest up to $400 m

Unni Krishan

NEW DELHI: Intel Corp., the world's largest computer-chip maker, plans to set up a chip assembly and testing plant in India to tap the country's growing technological dominance.

Intel plans to spend up to $400 million on the plant which could come up in the port city Madras, tech capital Bangalore or the Noida industrial township near the Indian capital, Indian communications minister Dayanidhi Maran said on Tuesday.

The proposed plant is a shot in the arm for Maran who, over the past year, has been aggressively lobbying with global telecoms and IT firms to set up manufacturing units in India. Maran said Intel had chosen India over China and Vietnam.

"I was able to convince Intel that India was the right choice and they agreed," Maran told a news conference.

A formal announcement will be made by Intel within a month, he said.

India, with its creaky infrastructure, was considered a long-shot, and was one of several Asian countries such as China, Singapore and Malaysia lobbying to attract Intel to their shores to build a manufacturing plant.

India's galloping telecoms sector, the world's fastest growing major wireless market, has become a hotspot for global equipment makers because of its huge growth potential.

Nokia, the world's largest handset maker, has announced an investment of between $100-$150 million to set up a base station factory and a handset manufacturing unit in the country.

Europe's top electronics contract maker Elcoteq already has a handset plant running in India.

Maran had set a target of attracting $800 million in foreign investment in telecoms manufacturing in the business year to March 2006 and $1 billion in 2006/07.

India's software skills are widely recognised and firms such as Motorola have set up large units to outsource software services.

"Intel's decision boosts the economic landscape of the country which was dominated by software services," Prashant Singhal, head of telecoms practice at global consultancy Ernst & Young, told Reuters.

"It is a positive step -- we will see more and more hardware equipment manufacturers setting up shop in India."

Intel manufactures chips in the United States, Ireland and Israel, and then ships them to sites in Asia and Costa Rica to be assembled and tested. The company lacks a full-fledged manufacturing plant in Asia, its fastest-growing market, a deficiency that executives had said they would like to address.

Analysts say Intel is preparing to announce this year a round of manufacturing investments worth up to $8 billion.

Intel already has a development centre in India's technology capital, Bangalore, which designs and develops software to power chips that drive computers and high-end networks for Internet-based applications.