Intel ups capex as India plant talks 'wobble'

$100m question

Intel yesterday raised its forecast 2005 capital expenditure by $100m more than it had been expected to.

The figure is, by an interesting coincidence, exactly what the chip giant is reported to have demanded from the Indian government if it's to build a chip testing plant in the sub-continent.

Intel's India plant has been on the cards for some time, but according to a report in Indian financial newspaper the Business Standard yesterday, the $700m facility's future is in doubt.

Citing government sources, the paper claims Intel is asking India to fork out $100m up front - a payment the nation appears unwilling to make. Intel is also negotiating for tax-beaks and other incentives, all of which are part and parcel of major plant plans.

In March 2005, Dayanidhi Maran, India's minister for information technology and communications, claimed Intel was close to a decision on siting the facility in India. The country has been on Intel's list of possible plant sites for some time, as former CEO Craig Barrett admitted in November 2004. The chip giant already has a number of software development and R&D facilities in the sub-continent.

Maran subsequently said he had convinced Intel to set up the testing plant in India, though Intel denied any decision had yet been made.

Whatever, as it reported its second-quarter financials, Intel last night said it was upping 2005's capex from $5.4bn to $5.9bn. An increase had been on the cards, but earlier indications pointed to a $5.8bn spending target, $100m less than the figure reported. ®

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