Getting in on the Action

It was as if, during the final quarter of 2005, the top players in a high-stakes poker game had brooded over their hands for months or years and then, all at once, placed their bets. IBM, Intel, and AMD all announced major investments in Indian chip design. Cisco, not generally thought of as a semiconductor maker, anted up as well. And even Microsoft seemed to be moving in to take a seat at the table, should the pot get juicy enough.

A major development was the announcement in November that HCL Technologies, India's top technology services firm, would do design work on IBM's Power Architecture family of semiconductor devices—chips that are customized for diverse hardware products, including Microsoft's Xbox game consoles and high-definition television receivers.

IBM already has Power Architecture design centers in Bangalore, as well as in China, Germany, Israel, Japan, and Switzerland, but this is the first time that it has outsourced such work. It's expected that an HCL design center in Chennai (Madras) will grow from barely more than a couple of dozen employees at present to as many as 1000 within two years.

At the end of November, AMD chief executive Hector de J. Ruiz announced that his company would join a consortium and supply technology to build India's first semiconductor plant, which is expected to cost about US $3 billion. Obtaining foreign investment in the venture, called SemIndia, was a high priority for the government—China already has close to 50 fabs—and relations with Intel soured when its chairman, Craig R. Barrett, dragged his feet. Not to be outdone, however, Intel announced on 5 December that it would invest upward of $1 billion in India over the next five years, more than it has spent in the country in the last decade.

Intel already operates its largest chip design center outside the United States in Bangalore, where it employs more than 2500. About $800 million could go for expanded R&D operations in India and $250 million into venture capital projects. Broadcom also has a thriving R&D facility in Bangalore and has announced it eventually will outsource production of chips for mobile phones to SemIndia. Its chief technology officer, Henry Samuele, said on a visit to India on 1 December that the performance of the company's Indian teams had surpassed his expectations.

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