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Intel, the world’s largest maker of semiconductors, said it would invest more than $1bn in India during the next five years in areas such as venture capital, though it stopped short of announcing firm plans to set up a manufacturing plant.

Craig Barrett, chairman, on Monday said the US chip-maker would set up the $250m Intel Capital India Technology Fund – the country’s largest venture capital fund – to invest in software and hardware start-ups.

Another $800m would be used to expand Intel’s existing research and development centre in Bangalore, which employs some 2,800, as well as to support some of the company’s education and community programmes in India. The planned investment more than doubles the $700m Intel has put into the country during the past 10 years.

Intel, however, disappointed industry watchers who had anticipated it would announce plans for a manufacturing facility, particularly since its rival Advanced Micro Devices last week said it would license its technology to a group setting up India’s first fabrication plant.

Mr Barrett said Intel was discussing with the Indian government the sites of manufacturing operations in the country but added: “We’re not ready to announce anything at this time.”

However, he said Intel would not follow the strategy adopted by AMD, which will outsource its microprocessing and logic manufacturing technology to SemIndia, a consortium of non-resident Indians that plans to begin construction on the $3bn fab next year.

“The technology we use is not available to third-party establishments and we do not make it available,” Mr Barrett said.

Intel commands more than 80 per cent of the global chip-making industry, while AMD has about 13 per cent.

Domestic demand in India is growing rapidly and is estimated at an annual $160bn by 2016, according to SemIndia.

The chipmaker, which has already put $100m into some 40 start-ups since 1998, said it would invest $2m-$5m in new Indian companies involved in areas such as cellular and wireless technology and broadband applications.

Intel is focusing more on emerging markets to maintain its double-digit annual growth in percentage terms. In January, it reorganised the company and created a Channel Products division to meet the needs of local markets worldwide.

P Chidambaram, India’s finance minister, said of the planned fund: “This new capital will give a head-start to the many new enterprises engaged in the frontline of research. With Intel’s backing, no doubt many of these companies will turn out to be huge successes.”

Copyright The Financial Times Limited 2019. All rights reserved.

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