Intel's Jones: India is very important to the chip maker

Whitefield is an industrial township on the outskirts of Bangalore. SAP, iGate and GE's John F. Welch Research Centre, among others, call it home. The Intel campus is located on the Sarjapur Ring Road, which leads to Whitefield. So, America's tech world is quite familiar with its (Whitefield's) name. But soon, it might become part of their daily lives. Whitefield is the name of a new chip Intel is designing; its uniqueness lies in the fact that it will be the first processor to be designed out of India from scratch. Intel, which has nearly 2,700 engineers and scientists working on the project, expects to begin shipping this Xeon class server chip by mid-2007. "India plays a very important role in Intel's overall scheme of things," says Franklin B. Jones, who took over as the company's President of India Operations only six days before meeting with BT. He is the first American to hold this position; all previous country heads have been executives of Indian origin.

Intel executives are tightlipped about the project, but BT learns that Whitefield will feature an entirely new micro-architecture. It is even likely that this 'Made in India' chip will replace Intel's bread-and-butter NetBurst architecture in x86 servers. And it could have major spin-offs. The new architecture could well lead to the development of an entirely new family of microprocessors within five years of its launch. The major plus for India: it will herald the country's arrival as a location for cutting-edge research in the semiconductor space and wipe out the residual image of the country as a place for low-end drudge work.

But the Whitefield Xeon Class Server Processor is actually just a small portion of what is going on inside Intel in India. It is also developing another new chipset (a chipset is one component of the entire chip) called Calistoga for its Napa Mobile Optimised Dual Core Processor. Napa, the codename for a 65-nanometre dual core processor, represents the third generation of Intel's Centrino technology. It will improve the multi-tasking and power management functions in laptops.

Again, the company is reluctant to divulge details. "IIDC (Intel India Development Centre) is working on hardware, software and services, including a next-generation server processor and a chipset for our mobile technology platform," says Anand Chandrasekher, VP and Director (Sales and Marketing), Intel Corporation, refusing to get into the specifics of either project. The company has so far invested $200 million (Rs 880 crore) in India and it's clearly paying off. Says Chandrasekher, who at one time served as technical assistant to Craig Barrett, now Intel Chairman: "We came here (in 1995) when it was not the fashionable thing to do. Then, we were not making a fashion statement."

Globally, Intel became the de facto industry standard for chips by teaming up with Microsoft; its chips are now as ubiquitous as the Windows operating system. Uncharacteristically, however, it tripped on technology over the past 24 months. Customers wanted processors that multi-tasked effortlessly, consumed lesser power and generated less heat, but Intel continued to dish out faster and faster chips-that most customers didn't really require-ignoring these other parameters. Result: its rival, AMD, caught up with it, albeit, temporarily. Crows Ajay Marathe, India Country Head, AMD, and its global CIO: "AMD has a clear leadership in technology." Chadrasekher, however, dismisses this claim. "The competition keeps trying, but Intel remains the market leader by a huge margin." Mercury Research, which tracks the industry, says AMD's share in the x86 server segment increased from 7.4 per cent in the first quarter of 2005 to 11.2 per cent in the second quarter; Intel remains the leader with 88.8 per cent.

And as Intel scrambles to maintain its overwhelming global domination, the Indian operations, its largest R&D and design unit outside the US, will play an increasingly important role. Chandrasekher says: "IIDC (which was established in 1999 with 10 employees) is working on Intel's crown jewels." The centre conducts cutting-edge R&D on microprocessors, chipsets, digital signal processing and networking products, communications software, stack optimisation solutions, graphic drivers, compilers, e-business applications and manufacturing automation solutions.

It is now accepted in tech circles that ubiquitous wireless broadband is the next Holy Grail. Intel is pushing its own version, called WiMax, for providing this. And Intel's India operations are, expectedly, at the forefront of this initiative. It is running several test projects based on this technology in association with the Uttaranchal government. "We will try this out in other parts of the country as well," says Chandrasekher.

Intel's Indian arm is also developing a rugged pc specifically suited to countries like India. Its Platform Definition Center is piloting this device, which runs on a car battery to tackle the problem of erratic power supplies, in 10 villages and expects to begin selling this product in early 2006. It has also launched the Intel Teach to The Future Initiative. Under this programme, more than 4.5 lakh teachers at government schools have been trained in computer use.

MENTOR & MATCHMAKER Intel's investment arm is placing massive bets on India.

Intel's Sodhani: India presents huge opportunities Intel inside does not refer only to silicon chips. not anymore. The US chip giant's investment arm, Intel Capital, has invested over $4 billion (Rs 17,600 crore) in about 1,000 tech and web-based companies across the globe. It entered the Indian market in 1998, and is now ramping up its operations here. "There are large opportunities in India," says Intel Capital President Arvind Sodhani. The "hot areas": mobility, WiMax and cellular application development. Intel Capital had invested in companies like Sasken, Subex, Indiainfoline and Sharekhan within months of entering India. The company, which does not disclose investment figures, has now exited all of them with profits ranging from twice to four times the initial investment. It is now bullish on the Bangalore-based optical networking start-up Tejas Networks. But it's more than just a seed money provider; Intel Capital has bet $10 million (Rs 44 crore) on IT education provider NIIT and currently has an Indian portfolio comprising shares of about 40 companies. "These investments are driven by strategic value and we will continue to look at opportunities across the lifecycle of companies," says Sodhani. Intel Capital also sees itself as a mentor and matchmaker for companies with complementary technologies across its portfolio and sometimes nudges them into M&A deals for greater synergies. Intel Capital executives recently visited a dozen Indian companies and are expected to finalise investments in some of them over the coming months.

But Intel's Indian sojourn has had its share of boo-boos, too. In June, Information Technology Minister Dayanidhi Maran declared that he had convinced Intel to set up a $400-million (Rs 1,760-crore) chip fabrication plant in India. But the company's negotiations with the government on certain concessions didn't work out. Jones is at his diplomatic best while responding to a pointed question on this. "Intel continues to evaluate all opportunities available," he says. That, for the uninitiated, means: "Sorry, we're going elsewhere." But it's a minor hitch in a relationship that has paid, and continues to pay, the company huge dividends.

There are other challenges that Jones has to tackle. Intel has recently sacked nearly 250 employees (or almost 10 per cent of its Indian workforce) for allegedly faking bills and making false claims on various allowances. "Intel expects its employees to maintain the highest ethical and business standards," says Jones, refusing to share any further details. Company insiders say this has led to significant loss of morale among staffers. Jones, however, emphatically denies this. "We continue to attract and retain the best talent in the industry," he says.

That it will have to do. How it manages its human resources here could well hold the key to whether Intel India continues to punch above its weight.

-reported by Venkatesha Babu, Rahul Sachitanand and Alokesh Bhattacharyya