STMicroelectronics, Europe’s largest chipmaker, announced last week that it will spend $100-million on two design centres in India to cash in on the country’s large, cheap but highly educated workforce.
The company, which is based in Geneva, plans to set up a centre in Bangalore and is buying land on the outskirts of New Delhi for another, which will become the company’s largest such facility outside Europe.
“The ultimate capacity will be 5 000 people in five or six years, but the near-term programme is to reach 3 000 people by end-2006,” the company’s president, Pasquale Pistorio, said.
STMicro was one of the first companies to spot India’s potential, opening its first R&D centre in 1990. The attraction is the large pool of skilled engineers willing to work at lower wages than Western developers.
Other companies have benefited. More than half of Texas Instruments’ employees at its research laboratories in Bangalore have PhDs.
STMicro’s chips end up in a wide range of devices such as cellphones, computers and DVD players, sales of which are booming in India.
The country’s personal computer market grew by 37% last year and analysts say that the number of cellphone subscribers will exceed fixed-line customers this year.
The consumer boom, says India’s privatisation minister, Arun Shourie, will lift the fortunes of the country’s hardware industry, which has been overshadowed by its software success story and China’s manufacturing powerhouses. — Â