Intel to buy larger Asian presence

December 7, 2000
Web posted at: 1:03 PM HKT (0503 GMT)

Hong Kong (CNN) -- One of Asia's largest corporate investors, the U.S.-based semiconductor giant Intel, will buy equity stakes in as many as 10 communications and networking companies across the region in 2001.

Days after announcing the expansion of the Intel Communications Fund from $200 million to $500 million, Oregon-based fund director John Hull told CNN.com he expected to step up the focus on emerging Asian firms.

Last year the fund invested in two privately-held Asian companies, India's Amoeba Telecom and Taiwan-based Wherever.net, among a total of 40 companies it bought into around the world. Elsewhere, it invested in 10 companies in Europe and the Middle East, with the balance being invested in the U.S.

"Next year in Asia I would expect that we should at least match the level of investment we make in Europe and the Middle East, there is so much activity here," Hull said on a visit to the International Telecommunications Union's Asian trade show in Hong Kong.

In 1998 the communications fund invested only 4 percent of its capital outside of the U.S., but last year the amount blew out to 35 percent.

"I would expect that in 2001 we would invest more than 40 percent of our funds outside the US," Hull said.

The Intel Communications Fund is a niche arm of Intel Capital, which last year invested more than $5.8 billion acquiring stakes in 12 companies, placing it among the top echelon of the world's technology investors.

So far in 2000, Intel Capital has invested in 19 companies in India, Australia, China, Singapore and Taiwan.

Hull says the Intel Communications Fund usually acquires minority equity positions in unlisted companies, often worth less than $10 million, in tandem with a venture capital fund (VC).

"We rarely take a seat on the board of the companies we invest in, preferring to leave that for the VC we co-invest with," Hull said.

The expansion of the Intel Communications Fund coincided with the broadening of its focus to wireless communications and computing firms, in line with Intel's move into the same area.

Company chief executive officer Craig Barrett told CNN.com earlier in the week that growth in the demand for microchips outside the core market of central processing units (CPU) for computers was likely to grow at beyond 50 per cent per year.

Historically, the CPU market has maintained growth of about 15 per cent, year on year.

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