Intel Plans it Big in India

Electronic News, June 26, 2000 by Uday Lal L Pa

Cochin, IndiaaReiterating its commitment to India, global chip giant Intel Corp. has recently launched strategic initiatives to increase its presence in India.

During the last 18 months, the world's largest semiconductor manufacturer has invested in approximately 15 Indian start-ups to the tune of $100 million. The company plans to increase the number of investments to 30 companies this year and double that number in 2001.

In addition to the investments in numerous Indian start-ups, Intel's strategic launch includes a data and development center in India, a foray into broadband technology, multiple development activities, and funding for India's education initiative.

"Intel Capital, the venture capital fund of Intel, will invest in about 30 Indian start-ups in hardware, software, services and application areas," said Craig Barrett, Intel's president and chief executive officer, who was in India recently. "The fund has already invested in 15 start-ups over the last 18 months," he added.

Intel has committed approximately $50 million to creating a data and development center in India. The center will be the sixth for the technology giant that already has two such centers in the U.S., one in the U.K., and one each in Korea and Japan.

Intel plans to play a role in the broadband technology arena as well. According to Jason Chen, vice-president and general manager of Intel Asia Pacific. "We will play the role of a proactive technology provider in the broadband area with our investments in IN Cable Networks, a television cable operator in Mumbai."

On the education front, Intel has been working in close collaboration with the Department of Education and National Council of Education, Research & Training (NCERT) in India. Intel plans to train around 100,000 teachers in India during the next three years. The development center at Bangalore houses 50 engineers now, with that number slated to increase to 500 engineers in three years.

Growing the Internet in India

Barrett said he expects to see an exponential growth in India's Internet business. Therefore Intel felt there was a need to capitalize on the convergence of voice and data communications as well as to invest heavily in the telecom infrastructure. This investment will provide the much-required bandwidth, which will in turn boost the demand for IT-enabled services.

India has an inherent strength in its base of knowledge workers, and the telecom infrastructure is just the fuel India needs to propel the country into the Internet economy, Barrett said.

High on Intel's agenda is the local television cable sector. "The market is fragmented and there is a phenomenal opportunity for consolidation, deployment of new technology and creation of (a) new set of services which the Indian market has never seen," said Sriram Viswanathan, the U.S.-based director of business development at Intel Capital, Intel's financing arm.

Intel expects its increased funding of Indian firms to translate into better-quality broadband infrastructure, Viswanathan said. "We invest for the long term and we are not looking to make a quick buck. There is an opportunity in India for services that are very fine-tuned to the local market such as e-commerce-oriented and educational services," he said.

Intel set up the development center in September 1999 to tap the large pool of engineering talent in the country and meet its worldwide need for engineering talent in both software and hardware.

The company is also determined to add more and more projects to the Indian development center.

"The Indian development center is an integral part of the company's worldwide research and development strategy," Viswanathan said.

Intel said it wants to build an infrastructure that would facilitate the growth of the Internet in India.

"We do not want to restrict ourselves to providing a solution for the e-commerce business only," Barrett said. "We are looking at opportunities to participate in building an infrastructure in the country (for the entire Internet)."

Intel has participated in building an infrastructure in other countries as well. It has ties with Pacific Cyberworks of Hong Kong to build this kind of infrastructure for China, Barrett said.

Recent Investment

The most recent of Intel's investments was in Pune-based Persistent Technologies. This company will serve as the center for Intel's new 64-bit chip, iTanium, in India.

According to Intel officials, Persistent will help local companies shift their software offerings from 32-bit processors to 64-bit processors.

Intel has also made an investment in a server farm in India that analysts expect to be placed near Mumbai. Intel has not indicated the total investment in this facility nor has it disclosed the whereabouts of the proposed operation.

Commenting on the possibility of Intel setting up a manufacturing base in India, Barrett said, "India is a possible candidate, but the quality of utility services has to improve for this to take place. As of today, there are no plans to set up a manufacturing base in the country."