Setting up of a fab unit in India doesn’t excite Hector Ruiz, chairman and CEO of the $5.64-billion microprocessor maker AMD—now striving to leave a rough patch. It’s the capability of the 1,000-strong Indian engineering work force at AMD’s research and development centres in Bangalore and Hyderabad that lends a sparkle to his eyes. During his second visit to India, he inaugurated a new engineering facility in Bangalore, besides dedicating his time to help push the 50x15 Initiative, a commitment towards reaching affordable Internet access to 50% of the world’s population by 2015. FE’s Pragati Verma and Sudhir Chowdhary met him for an exclusive interview while he was in New Delhi to attend the World Economic Forum Summit. The excerpts:

How do you see India’s role and its importance in AMD’s global R&D operations?

We have a slightly different view on what we are doing in R&D than what other Companies are doing. We view the Bangalore and Hyderabad R&D centres as an integral part of the R&D strategy for the company globally. We are not doing what other Companies do – outsource low-end work to their centres here. Our India centres are right in the centre of our road maps and strategy. They are critical to us and the main reason for this is the world-class engineering force we have at the centres. We are trying to benefit from them by expanding our centres here.

Are there any specific areas you want these centres to focus on?

Our centres here are what we call them as centres of excellence. They are able to combine a lot of technologies that are different. Normally, people call such concepts and technology as system on a chip. Our engineers are good in this area and hence, a major focus area for us in India.

Is the ramp-up of the R&D operations here a prelude to opening of a full-fledged fab?

I don’t see any connection between R&D expansion and opening of a fab. Right now, all our expansions are related to getting more capability in R&D and our desires to do as much as we can from India because we have a strong core of experts available. Hence, there is a strong case to expand our R&D capabilities here.

Don’t you believe in R&D being close to a fab? Do you feel it’s not so important?

It used to be very important earlier but much has changed.

A fab involves an investment of around $4 billion and it's a very hard one close to an R&D centre. It's much easier to have R&D centres around the world that can benefit from the expertise from different regions. When it comes to setting up a fab, it's the return-on-capital which matters. With good satellite and broadband communications, it has definitely minimised the need to have R&D operations close to a fab. So, at this point of time and in the near future, we are definitely not considering the setting up of a fab in India.

But you are in alliance with Sem India to set up a fab in Hyderabad…

We have agreed to transfer technology to them so that they could use it to build products in a fab. I am hopeful that they are able to get their operations up and running, but at this moment, I think they are slower than we thought.

Aren't we a bit too late in setting up a fab in India?

What has happened is that requirements are continuing to change over the years. If it becomes a priority for India to open a fab, I am sure it would be realised. However, I feel that there are other things that are high on priority than setting up of a fab.

When it comes to setting up a fab, tremendous commitment is required on the part of a national and a state government. It's a very challenging and a complex exercise to set up a fab. It requires a $4-billion investment and another $2 billion around it to have a facility up and running. Approximately, it takes four years to build a fab and another four years to build the related infrastructure.

In my opinion, I think it's not important enough to do a fab here; there are other economic investment issues which are more meaningful at this moment of time. Electronic manufacturing is not happening in India. So, consumption of semiconductors is not taking place here.

Do we expect to see an AMD chip to be developed from scratch from here?

Absolutely, both Bangalore and Hyderabad centres are integral part of our global R&D operations. We have a technology called Fusion that we consider an important part of our future. Both the centres are playing an important role in its development. Our future products are going to be 100% based on this technology. We are approaching 1,000 engineers here.

How does the Indian market compare with that of China's?

There are a lot of similarities and dissimilarities. You have one where there is central planning and a communist-based market. And they have really done well for themselves. I really admire and respect what the Chinese people have been able to achieve.

India is the largest democracy and its Economy is showing a strong growth despite all its complexities. Agriculture is a big part of the Economy. The economic growth has placed a huge demand on the resources in India.

If one were to make a comparison between the two, for instance on the consumption of cellphones based on economic growth and not population growth, then I think India is right on the same line as that of China. Though in round numbers, India is about seven years behind China