Intel Plans $400 Mln India Chip Unit, Minister Says

Intel Plans $400 Mln India Chip Unit, Minister Says

Intel Corp., the world's biggest maker of computer chips, will set up a $400 million facility to assemble and test semiconductors in India, Information Technology Minister Dayanidhi Maran said.

``I've been able to convince Intel to set up the plant in India,'' Maran told reporters today after a trip to the U.S. to attract investment from companies including Santa Clara, California-based Intel and Applied Materials Inc. Intel will announce its decision in a month, he said.

Intel and electronics makers Flextronics International Ltd. and Solectron Corp. are planning to invest in India after the minister highlighted policies and benefits including tax breaks offered by the government. Maran expects the three companies to invest as much as $1.2 billion by March 2006.

Intel has identified Bangalore, Chennai and Noida, near New Delhi, as possible sites for facility, Maran said. The chipmaker considered India, China and Vietnam, said Maran, who met Intel Chairman Craig Barrett on June 7.

Barrett said in November Intel is considering India, among other countries, as a location for a chipmaking plant.

Shares of Intel fell 10 cents to $26.90 at 12:49 p.m. New York time in Nasdaq Stock Market composite trading. They have gained 15 percent this year.

No Decision

Intel hasn't announced where it will build its next test and assembly plant, Bill Calder, a spokesman for Santa Clara, California-based Intel, said today.

We are always looking and there is routinely speculation based on our site selection activities, but that doesn't necessarily mean we are going to build there,'' he said.

Flextronics, the world's biggest maker of electronics for other companies, will increase its investments in India, Maran said, after a meeting with Michael McNamara, chief operating officer of Flextronics in the U.S. The company already has a manufacturing unit in Bangalore.

Solectron, the No. 2 maker of circuit boards and electronics for other companies, agreed to ``seriously'' consider investing in India, Maran said. He met Solectron Executive Vice President Craig J. London in the U.S.

A group including Applied Materials, the No. 1 manufacturer of equipment used to make semiconductors, International Business Machines Corp., India Electronics Manufacturing Corp. and the India Semiconductor Association may set up a chipmaking plant in India at an estimated cost of $3 billion, Maran said.

The government is expecting a proposal from the group and has promised to help take the plan forward, he said.

The group will prepare a feasibility report and visit India next month, Maran said.