Intel Dismisses Indian Manufacturing Report

Intel has called news reports that it will establish a chip manufacturing operation in the southern city of Chennai, India, speculative.

The report of a $45 million investment by Intel was the second to surface recently.

Verghese Thomas, Intel's communications manager in India, said the report carried in India's Economic Times "is pure speculation, and currently there are no plans to set up a manufacturing facility in India."

Still, speculation that Intel is at least considering a test and assembly facility in India is unlikely to end any time soon. Senior industry executives have in recent weeks been speaking of what they see as Intel's genuine interest in manufacturing in India. Intel currently has only a software development center here employing about a 1,000 engineers. Software development for a next-generation processor for servers is one of the activities being carried out here.

Establishment of a full-blown semiconductor fabrication facility seems unlikely given the logistical problems that even PC manufacturers often complain about.Chennai is considered an all-weather port but lacka an adequate drinking water supply. A manufacturing facility would face huge water supply problems. Any government move to supply huge quantities of water for manufacturing is sure to attract popular protests.

The only alternative would be a desalination plant, but it remains unclear whether any high-tech company would be will to make such a huge investment.

A decade ago, Texas Instruments considered manufacturing here, but only on the condition that India's Department of Information Technology shared half of the cost. The government balked, and the proposal went nowhere.

Analysts said that if Intel eventually opens an Indian facility, others might follow. Such was the case when Texas Instruments founded a software development facility here in the mid-1980s.